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LIBRARY OF THE 

UNIVERSITY OF ILLINOIS 

AT URBANA-CHAMPAIGN 

IN MEMORY OF 

STEWART S. HOWE 

JOURNALISM CLASS OF 1928 



STEWART S. HOWE FOUNDATION 



332 .1 

H234f 



I.H.S. 




Fifty Years of Banking in Chicago 



History is the depository of great actions: the witness of 
what is past, the example and instructor of the present, 
and monitor of the future. CERVANTES. 



Merchants' Loan and Trust Building in 1907 
Northwest Corner of Adams and Clark Streets 



Fifty Years of Banking 
in Chicago 



By 
William Hudson Harper 

and 

Charles H. Ravell 



1857-1907 



The Merchants' Loan and 
Trust Company 



Contents 

PAGE 
Preface . . . . i 

CHAPTER I 
The Bank's Administration and Departments 3 

CHAPTER II 

Origin and Early History of The Merchants' 

Loan and Trust Company . . 29 

CHAPTER III 
The Bank after the Chicago Fire in 1871 43 

CHAPTER IV 
Men and Acts of an Important Era, 1871-1907 57 

CHAPTER V 
Early Banking in Illinois . . 73 



I 



Preface. 

HE Merchants' Loan and Trust Company, 
oldest existing bank in Chicago, offers this 
book in the commemoration of its fiftieth an- 
niversary and half-century of public service. 
Herein is briefly told what has made this 
institution a foremost bank today. Then is told the 
story of its organization, in a period of financiering 
eccentric and disastrous, by men whose character, acts 
and resources peculiarly qualified them for their impor- 
tant undertaking. Then are furnished from the records 
of the bank (the same being continuous since the great 
fire of 1871), certain data which they may read with 
pride who remember the bank's distinguished dead, 
prominent among the makers of this city and its trade. 

Finally, this book offers a condensed narrative of 
the evolution of Illinois banking. 

While there is still room for improvement in bank- 
ing and currency systems, the progress made in the 
last fifty years will be apparent to the reader of this 
chapter. 

The Merchants' Loan and Trust Company, having 
attained a half-century of uninterrupted growth without 
merger or consolidation with a single other banking 
institution, presents to whom it may concern, with 
gratitude for the past and hope for the future, this 
brief story of its unique career. 

In this history of the bank's progress, it has been 
thought best to reverse the chronological order of 
events. Age of itself does not signify progress, and 

CO 



if The Merchants' Loan and Trust Company were not 
today a thoroughly modern bank, there would be little 
excuse for these pages. Believing, however, that it 
fully meets the requirements of a sound banking insti- 
tution, the early pages of this volume are devoted to 
The Merchants' Loan and Trust Company of today. 



[2] 



The Bank's Administration and 
Departments 



The Bank's Administration and 
Departments. 



I 



HE Merchants' Loan and Trust Company 
now operates six departments which charac- 
terize the greater modern bank. As this 
book is primarily a history, it seems proper, 
even in a city distinguished for the sound- 
ness and capacities of its banks, to emphasize those 
qualities and facilities which have undeniably given this 
institution its strength and usefulness. 

The aggregate banking resources of The Merchants' 
Loan and Trust Company approximate $57,000,000, 
the same including $7,000,000 in capital, surplus and 
profits, and $50,000,000 in deposits. 

The business transactions of the bank as an organic 
institution are not only in every particular understood 
and administered by its officers, but by its directors 
also. Once a week a standing committee of two 
directors reviews every loan made by the bank, which 
means, not only the loans of the previous week, but 
all loans held at the date of meeting. Once a month 
the full board of directors meets when one member of 
the executive committee retires and another director is 
appointed to his place. Thus the policies and acts of 
the bank's administration are in constant review by 
every guardian of its fortunes. 

Once every three months a separate committee of 
three directors is appointed, which makes a complete 
examination of the assets of the bank, counting the 

[5] 



cash, verifying all the notes, examining collateral, 
checking all investments, and making a full written 
report to the board of directors. In addition to this, 
this committee examines all the securities held by the 
trust department. 

The board of directors as now constituted (May i, 
1907) is as follows: 

Cyrus H. McCormick, 
*Albert Keep, 

Lambert Tree, 

Erskine M. Phelps, 

Moses J. Wentworth, 

Enos M. Barton, 

Thies J. Lefens, 

Chauncey Keep, 

E. H. Gary, 

Clarence A. Burley, 

John S. Runnells, 

E. D. Hulbert, 

Orson Smith. 

This bank receives no public moneys on deposit, 
and will accept no deposit when it is required to give 
bonds or special security of any kind. No depositor in 
this bank is secured more than any other depositor. 
The smallest depositor in the savings department, with 
his credit of one dollar, has exactly the same security 
as the depositor with millions to his credit. 

The Merchants' Loan and Trust Company issues 
certificates of deposit bearing from two per cent, to 
three per cent, interest, according to the time left on 
deposit and the amount deposited. 

Loans are made upon approved collateral at current 
rates of discount. Responsible borrowers and deposi- 
tors are assured of the most liberal accommodations 
consistent with sound banking. 

'Deceased May llth. 1907. f g 1 



The policy of The Merchants' Loan and Trust 
Company, not to receive public money or deposits, 
has relieved it of any obligations to state, county or 
city officers. It has never stood sponsor for, or signed 
the bond for any city or county official. Consequently 
it has never been a political bank, nor has it had any 
selfish interest in public affairs, but rather has it been 
conducted through its half-century of service as a bank 
of merchants and manufacturers, a bank of commerce 
and industry, a bank for savings, a bank for a larger 
and richer Chicago. Undeniably it has felt the storm 
and stress of crises, and such periods as befell the bank- 
ing world in 1873 and 1893, for instance, are at least 
remembered; but in all temporary vicissitudes there 
has been something in the men and acts of this bank 
which has contributed to its endurance, its growth 
and the continued extension of that coveted form of 
general credit, to-wit: a good name. It has been for- 
tunate in its securities, in its small percentage of losses, 
and in its personal oversight by its directors. It has 
been its administrative policy that dividends should 
never be immoderate, and that a surplus should ever 
be accumulating. 

It is impossible to reproduce the first statement of 
condition of The Merchants' Loan and Trust Com- 
pany, as those records were destroyed in the great 
Chicago fire. The cashier's report made to the stock- 
holders December 31, 1871, shortly after that event, 
can be compared with interest to the following state- 
ment published at the call of the auditor of the State 
of Illinois, on May 21, 1907, almost at the completion 
of one-half a century of successful banking. A future 
historian can make his own comparison a half-century 
hence. 

[7] 



Resources 

Loans and Discounts $26,830,072.44 

Bonds and Mortgages , 9,981,509.34 

Due from Banks 13,521,287.45 

Cash and Checks for Clearing House 6,829,345.14 

$57,162,304,37 

Liabilities 

Capital Stock $ 3,000,000.00 

Surplus Fund 3,000,000.00 

Undivided Profits 1,273,851.82 

Reserved for Accrued Interest 31,436.45 

Deposits 49,857,016.10 

$57,162,304.37 

This bank came to its task in a period of financial 
folly and irresponsibility. Uniformity and stability 
had not yet been impressed upon American banking 
by a national banking law, and license for mad finan- 
ciering had wrought a perilous insecurity in trade and 
finance. Charlatanism juggled values, while standards 
were missing. There was wanted a financial institu- 
tion, founded upon sane principles, fortified with 
abundant capital, and conducted by people of good 
repute. In short, there was wanted a bank with a per- 
sonality. At this juncture, in 1857, Chicago citizens 
most competent to discharge what they undertook, 
established The Merchants' Loan and Trust Company. 
Its policy was to pacify and conserve rather than to 
disturb and dissipate. Conservatism in banking is not 
cowardice or hesitancy or indifference, but rather a firm 
and courageous regard for probabilities. 

This bank was founded in the era of "wild-catism" 
and was a new idea in the time of the reign and fall of 
banks of illusive issues. With the exception of one 
departure from its practice as a defensive expedient, 

[8] 



the new bank uttered no circulation. It undertook no 
responsibilities in which it might default, nor any 
chances in financiering in defiance of common sense. 
It was a real bank, with real capital, and plenty of it, 
started by reputable and successful business men in the 
trade center of the wonderful and growing West. In 
the nature of its soul and structure it was at once 
recognized as a friend to the permanent welfare of 
Chicago. In its evolution it has sought to avoid 
speculation, and by its banking policy to discourage 
speculation by others, save in forms which must char- 
acterize every human enterprise. 

The last decade has been the era of great expansion 
and growth. During this period the bond, trust, 
savings, and farm loan departments have been created 
in the order named. 

The removal from the Portland Block to the bank's 
present quarters in The Merchants' Loan and Trust 
Building took place in June, 1900. Since that time 
the growth of the business has required more space. 
Today the bank occupies the entire banking floor of 
the building, with large clerical quarters on the third 
floor. 

The Merchants' Loan and Trust Company has 
never consolidated with, or absorbed the business of, 
any bank. Its steady and substantial growth is shown 
by decades as follows: 

Tear Capital Surplus Deposits 

1857 $ 500,000 * * 

1867 1,000,000 * $ 1,723,000 

1877 1,500,000 $ 100,000 2,321,000 

1887 2,000,000 1,000,000 8,069,000 

1897 2,000,000 1,554,077 18,445,000 

i97 t3,ooo,ooo 4,273,851 49,857,000 

*Records burned in Chicago Fire 
tStatement May 21. 1907 

[9] 



When one of the closest overseers of this bank's 
fortunes was asked by the writer of this history to 
characterize in the broadest way the nature of the 
service of the first half-century of The Merchants' Loan 
and Trust Company, this well known citizen replied : 
"I would say before all, that this bank's policy has 
been marked by breadth of scope, integrity, fidelity 
and straightforward dealing. If this bank needed a 
monumental memorial I would have written upon it 
such sentiments as these." 



[10] 



The Foreign Department. 

THE foreign exchange department does every 
sort of foreign banking. Its volume and 
scope have increased commensurately with the 
growth of the bank. 

This department buys and sells bills of exchange, 
transfers money by draft and cable, issues letters of 
credit for use both abroad and at home, deals in foreign 
coin and bank note, and grants commercial letters of 
credit for importers to aid them in buying in foreign 
countries where their standing and credit may be 
unknown. 

The foreign exchange department is a valuable adjunct, 
frequently aiding the bank in placing its available funds 
to better advantage than can be done in America, and 
enabling it to loan in whatever foreign market there 
may be offered the best interest return. This depart- 
ment also undertakes collections of estates in foreign 
countries. Chicago has a large foreign-born popula- 
tion to which this bank, in the collection of estates, 
has proved of much service. 

The foreign exchange department has the following 
distinguished and trustworthy connections in the com- 
mercial centers of Europe: 

England London. Union of London and Smith's 
Bank, Limited; Lloyd's Bank, Limited. 

Scotland Edinburgh and branches. National Bank 
of Scotland, Limited. 

Ireland Dublin and Belfast. The Munster and 



[ii] 



Leinster Bank, Limited; The Belfast Banking Com- 
pany, Limited. 

France Paris. Comptoir National d'Escompte de 
Paris; Munroe and Company. 

Germany Hamburg. Deutsche Bank; Dresdner 
Bank. 

Holland Amsterdam. Amsterdamsche Bank. 

Belgium Antwerp. Banque d'Anvers. 

Switzerland Zurich. Banque Federale. 

Austria Vienna. Anglo-Austrian Bank. 

Italy Genoa. Banca Commerciale Italiana. 

Denmark Copenhagen. Den Danske Land- 
mandsbank. 

Norway Christiana. Centralbanken for Norge. 

Sweden Stockholm. Aktiebolaget Stockholms 
Handelsbank. 

The foreign exchange department was organized in 
1883 by J. G. Orchard, who was its manager until 
1895. He was succeeded by P. C. Peterson, who 
conducted it until 1906, and who was in turn succeeded 
by H. G. P. Deans. 



12] 



\ 



Elected Director 1884 



CYRUS H. MCCORMICK 




* Elected Director 1887 



^Deceased May 11, 1907 



Elected Director 1890 







LAMBERT TREE 



Elected Director 1890 



Second Vice-President 1884 
Elected Director 1890 
Vice-President 1892 
President 1898 



Elected Director 1898 



MOSES J. WENTWORTH 




Second Vice-President 1895 
Vice-President 1898 
Elected Director i 



Elected Director 1898 



Elected Director 1903 




E. H. GARY 



Elected Director 1904 





TRIES J. LEFENS 



Elected Director 1904 



Elected Director 1904 



CLARENCE A. BURLEY 




Elected Director 1906 



The Bond Department 

THE bond department of this bank was estab- 
lished in 1899. Previous to that time The 
Merchants' Loan and Trust Company had 
been a large buyer of bonds for its own 
account and for its clients. The necessity for hand- 
ling this branch of its business more intelligently led 
to the organization of this department. 

It has been the endeavor to conduct the bond 
department in such a manner as to co-operate with, 
and supplement, the other departments and the general 
business of the bank, realizing that while a well con- 
ducted bond business reflects credit upon an institution, 
any serious mistake in handling securities would injure 
not only the bond department but the entire bank. 
The Merchants' Loan and Trust Company, has, 
therefore, pursued its course along somewhat more 
conservative lines than those adopted by bond dealers 
generally, and a large portion of the bonds it has 
handled have been listed railroad bonds or municipal 
securities. The bank is ready, however, to investigate 
entire bond issues of established corporations where 
the character of the security is such as to make a 
desirable issue. It has placed a number of such issues 
with its clients, and they have uniformly proved to be 
among the most satisfactory investments offered. 

While this company does not guarantee bonds sold 
by it, nor promise to re-purchase them, it has been, 
nevertheless, its policy to make a market for its 

[14] 



securities; and there is no place where customers desir- 
ing to re-sell their bonds have found fairer treatment. 

In addition to bonds offered for sale this bank is a 
large buyer of bonds, and the purchases for its own 
investment and for the trust funds left in its charge, 
amount to several million dollars annually. The 
character of the bonds offered for sale is, as a general 
rule, the same as those purchased for investment, and 
in purchasing bonds of this institution the investor 
should remember that he is not dealing with one whose 
sole desire is to dispose of bonds already purchased, 
but with a large and experienced investor. 

This bank is of real service to any investor in con- 
servative securities, whether this be a woman with $500 
in savings, or an investing capitalist. Negotiations are 
facilitated by personal interviews, and by circulars 
describing bonds on hand which are issued from time 
to time, and are mailed on request, or are sent regularly 
under standing order. 

John E. Blunt, Jr., has had the management of this 
department of the bank since its organization eight 
years ago. 



[15] 



The Trust Department. 

No department of this bank has more 
completely justified the foresight of the insti- 
tution's founders than has the trust depart- 
ment. It has grown with the banking depart- 
ment proper, receiving strength from the latter' s 
increasing resources, and bringing to it patrons with 
interests both great and small. 

The business of the administration of trusts has 
become a profession closely supervised by the State, 
and more and more confided in by the general public. 
It has been found that a corporation of great resources, 
conducted by financiers and men of affairs of the 
highest capacity and integrity, and held to its assumed 
responsibilites by valuable pledges and the law of the 
State, can perform for persons and corporations, seeking 
administrators of trusts, an office which for economy 
and efficiency exceeds anything which can possibly be 
rendered by single individuals or firms whatever their 
talents or virtues. 

The range of service performed in the execution of 
trusts by a trust company, is not only very broad but 
of great value to society. This service is one of the 
leading functions of The Merchants' Loan and Trust 
Company. This bank, with its accounts frequently 
examined by its own committees and by a representa- 
tive of the auditor of the state, with security on deposit 
with this same official, and by aid of the legal advice 
of competent counsel, and under the eyes of courts, 

[16] 



has accepted in trust not only the largest estate up to 
this time ever thus bestowed with a trust company, 
namely that of the late Marshall Field, but smaller 
trusts from the dependent and inexperienced. 

It has executed testamentary trusts, whereby the 
wishes of a testator have been in some instances, even 
more than fulfilled for his survivors. In consultation 
with this bank's officers and legal counsel, it has often 
opened a wise plan for the disposition of an estate quite 
unimagined by an applicant for its aid. 

It has acted with profit to the parties concerned as 
administrator in all of the various technical relations in 
which this service is known to the law. It has been 
the guardian of minor children, and conservator of the 
estates of spendthrifts and incompetents, and in these 
connections has not only faithfully but profitably to the 
parties concerned, discharged the conserving functions 
with which by law it has been endowed. It has served 
as agent for the care and management of the real and 
personal property of individuals; been created the cus- 
todian of securities by absentees; has received proper- 
ties in trust during the grantor's life, and efficiently 
managed them; it has acted as stock transfer agent of 
corporations, as registrar of stock, as trustee and mort- 
gagee under trust deeds or mortgages securing issues 
of bonds; as assignee and receiver, and as depositary in 
the reorganization of legitimate corporate enterprises, 
but without engaging in promotions. Leon L. Loehr 
has been the manager of this department since its 
creation in 1900. 



[17] 



The Savings Department. 

A NATURAL part of such an institution as The 
Merchants' Loan and Trust Company is a 
savings department. This bank was author- 
ized by the legislature of Illinois, in an act 
incorporating the bank in 1857, to conduct a savings 
business, and provision was made therefor in the 
original name of this company, which was formerly 
the Merchants' Savings, Loan and Trust Company. 
Circumstances at that time did not justify the creation 
of this department in the bank's early years, and 
eventually the corporate name was changed to its 
present form in conformity with fact, but in 1902 
the board of directors considered that the time was 
ripe for the establishment of a savings department. 
This department was opened on February 24, 1902. 
At once the public recognized that such a bank was 
peculiarly equipped to receive and care for savings. 
It had conservative management, great resources, 
experience and a reputation in Chicago's banking world 
which was unique. The patronage of this department 
began instantly, and in ten months' time, at the close 
of the year, the saving deposits amounted to $ 1,979,000. 
In 1906 it was necessary to remove the savings 
department to the large quarters opposite and across 
the hall, which were vacated for this purpose by the 
Chicago Clearing House. The savings department 
has now ample facilities to handle the banking business 
of depositors promptly and to their entire satisfaction. 



[18] 



Believing banking by mail to be of advantage to 
the bank properly conducting it, and to numberless 
people seeking strongholds of deposit, the savings 
department has added facilities for the practice of this 
form of public thrift. 



[19] 



The Farm Loan Department. 

THIS bank offers its services to investors with 
the guarantee that every farm mortgage it 
offers for sale has its stamp of approval, its 
judgment being backed by the investment of 
its own funds. 

The basis of life and the Nation's wealth are the 
farm and its products. Already the American farmer 
receives more than $6,000,000,000 yearly from what 
he produces from the soil. The great corn belt in 
particular surpasses all in fruitfulness and reliability. 
These sovereigns of the corn belt, Illinois, Iowa and 
the southern counties of Minnesota, are conceded to be 
the safest farm loan sections of the United States. 
The farm lands of these states are estimated to be 
worth more than $4, 500,000,000, or about one-third 
of the value of all the farm lands of the twelve great 
central agricultural states. 

When a farmer borrows money to develop proper- 
ties in this particular territory, he borrows to make a 
good thing better. He does this by diversified and 
intensive farming, helped by those economic and social 
facilities of magical potency, good roads, rural mail 
delivery, the telephone, the trolley and the automobile, 
and by those older and standard auxiliaries, railways and 
waterways. A thrifty farmer borrows as a thrifty mer- 
chant borrows. He means to protect and enrich his 
original investments. 

Each would sometimes over-borrow, but neither is 

[20] 



permitted to do so when the lender is wise. Fully 
ninety per cent of the loans placed in the corn belt are 
secured by mortgages incurred for the development 
of property unerringly certain to recoup the owner 
manifold. No class of security is less subject to way- 
ward assault upon its stability than the farm mortgage. 
None is less affected by hard times. None can be 
more confidently bought and forgotten than one which 
is the pledge of an intelligent farmer of the richer states 
of the corn belt. More than one-half of the assets of 
a great eastern insurance company are loaned upon 
mortgages secured almost entirely by farm properties. 

But to make security doubly secure an agent, such as 
The Merchants' Loan and Trust Company is, makes 
a farm loan with provisions of safety for the borrower 
more than ordinary. It is the method of making the 
loan that constitutes the difference between a good and 
a poor farm mortgage. Investors buying through 
The Merchants' Loan and Trust Company get the 
benefit of fifty years' experience in making investments; 
the methods are the most exacting, every precaution 
to protect the investor being taken. 

Applications for loans come, in the first instance, 
to a well known and responsible banker in the vicinity 
of the farm on which a loan is desired. The farmer 
makes a sworn statement of the cost and condition of 
his farm, and the banker makes a full written state- 
ment of the condition and value of the land, based 
invariably upon personal inspection. These papers 
are passed upon by experts in the bank, thoroughly 
versed in land values, and, if the statements are 
satisfactory and the amount asked for is fifty per cent., 
or less, of the cash value of the land, exclusive of 
buildings, the abstracts are referred to the bank's 

[21] 



attorneys for the examination of title. This part of 
the work is vital, and is done with the utmost care 
and thoroughness; no loan is passed until every 
essential legal point is covered and the borrower's title 
found to be perfect. 

The traveling examiner of this bank (who up to 
this time has had nothing to do with the transaction), 
then proceeds to make a final personal inspection of 
the land, also a complete, independent, written report, 
covering every detail. If this report verifies the 
statements of both farmer and the local banker, the 
loan is accepted. 

The farm loans placed by The Merchants' Loan and 
Trust Company are sold on a basis to net the investor 
four and a half per cent., and the purchaser is given 
ninety days in which to investigate the security. The 
bank rendering every aid in making such investigation. 

Since the organization of this department of the 
bank in 1905, it has been under the management of 
Frederick W. Thompson. 



[22] 



Safe Deposit Vaults. 

WHILE the Merchants' Loan and Trust Safe 
Deposit Company is a separate corporation, 
it is practically a department of the bank. 
The officers of the bank are the directors of 
the safe deposit company, and its business affairs are 
closely allied with The Merchants' Loan and Trust 
Company. This branch of banking has had a remark- 
able growth in Chicago. The deposit vaults of the 
banks and trust companies of Chicago harbor posses- 
sions of great variety and of incalculable value. 

No structure more completely declares its capacity 
to fulfill its purposes than a safe deposit vault. All its 
substance is enduring. Through and through it is an 
absolute and inspiring citadel of strength. Modern 
and similarly constructed vaults were not damaged in 
the slightest by the great Baltimore fire in 1904, or the 
San Francisco fire and earthquake in 1906. 

The vaults of the Merchants' Loan and Trust Safe 
Deposit Company are spacious and impregnable. They 
are surrounded by many private rooms necessary to 
the constant visitors to such a utility. The boxes of 
these vaults are of various sizes, one size sufficient for 
the precious will and other papers of the man of no 
great means, while other sizes store the valuable papers 
of large corporations and estates. Today no article of 
value not in constant use, and which can be stored in 
a safe deposit vault, should be carelessly kept in houses, 
hotels and business offices. There is also a large care- 



[23] 



fully arranged vault for the safe keeping of trunks, 
silverware and other bulky packages. Packages are 
received and safety is guaranteed to the extent of the 
value placed thereon. Private safes can be rented by 
the year at prices varying with size and purpose. 
These vaults are conveniently accessible from the 
banking rooms and from the main entrance lobby 
of the building, and are under the management of 
Alfred L. Goldsmith. 



[24] 



The Executive Administration. 

THE executive administration of this bank is 
today conducted by six general officers giving 
their entire services to its affairs. No officer 
is identified with other business enterprises. 

The presidents of The Merchants' Loan and Trust 
Company and their terms of office have been as follows: 

J. H. Dunham, from the time of the incorporation 
of the bank, in 1857, until the spring of 1862; Henry 
Farnam, from spring of 1862 to 1863; Solomon A. 
Smith, from 1863 until the time of his death, in 1879; 
John Tyrrell acted as president after the death of 
Solomon A. Smith until his regular election as presi- 
dent, in 1 8 8 1 , and then served in that office until 1 8 84. 
J. W. Doane was president from 1884 to 1898 and 
Orson Smith, the present incumbent, has served since 
1898. 

The vice-presidents have served as follows: 

John High, Jr., from June, 1857, until the fall of 
the same year (Walter Newberry acting as vice-presi- 
dent to fill out Mr. High's unexpired term from the 
fall of 1857 into the year 1858); Jonathan Burr, from 
1858 until the spring of 1860; H. H. Magie from the 
spring of 1860 until the spring of 1862; Solomon A. 
Smith, from the spring of 1862 to the spring of 1863; 
W. E. Doggett, from 1863 until 1877; John Tyrrell, 
from 1877 un til 1881; Byron L. Smith, from 1881 
until 1885; P. L. Yoe, from 1885 until 1892; Orson 
Smith second vice-president in 1884, vice-president 
from 1894 until 1898; E. D. Hulbert, second vice- 
president in 1895, an d vice-president since i! 

[25] 



The cashiers and their service have been as follows: 
A. J. Hammond, from the opening of the bank 
until November, 1857; M. B. Bartlett, from Novem- 
ber, 1857, until June, 1858; D. R. Holt, from June, 
1858, until 1862; Lyman J. Gage, from 1862 until 
1868; Charles Henrotin, from 1868 until 1878; 
H. E. Lowe, from 1878 until 1884; F. C. Osborn, 
from 1884 until 1895; J. G. Orchard, the present 
cashier, since 1895. 

Henry E. Lowe was assistant cashier from 1871 to 
1878, F. C. Osborn succeeding him and occupying 
that position until 1 8 84. 

F. N. Wilder became assistant cashier in 1891, 
having served in other capacities with this bank since 
1 877. Frank G. Nelson has served as assistant cashier 
since 1900. P. C. Peterson became assistant cashier 
in 1902, having served in various other capacities since 
1884. 

The fiftieth anniversary of this bank is a suitable 
occasion to acknowledge the long and valuable services 
of a number of the "old employes," who have carried 
on the detail work of the bank in a most creditable 
manner and with a record of twenty years or more of 
honorable service. In this roll are 

John M. Oosterbeck, 

William Dent Beall, 

Isaac H. Pervier, 

Robert N. Ward, 

William B. Hall, 

John O. Barber, 

William J. Quetsch, 

Robert T. Durrell, 

Charles L. Gary, 
*Isaac W. Brown, 

Gale Blackburn. 

* Deceased April 6. 1907. [26] 



Present Location and the Changes 
Made in the Past. 

THE location of The Merchants' Loan and Trust 
Company has been changed from time to time 
to conform to the business center of the city. 
The bank's first location was at the northwest 
corner of South Water and La Salle Streets, under the 
Board of Trade rooms. It continued in business there 
until the spring of 1 860, when it removed to the Dickey 
Building, at the southwest corner of Lake and Dear- 
born Streets, where it remained until the fire of October 
9, 1871. Immediately after the fire temporary quarters 
were occupied in Solomon A. Smith's house, on Wabash 
Avenue below Harrison Street. Here the bank 
remained until the completion of the Manierre Building, 
at the northeast corner of Madison and Dearborn 
Streets, into which it removed in the spring of 1872. 
Requiring larger quarters, it moved, in 1881, to the 
Portland Block, at the southwest corner of Washington 
and Dearborn Streets, where it remained until 1900, 
when it removed into its present location, the Mer- 
chants' Loan and Trust Building, on the northwest 
corner of Adams and Clark Streets. 

Several illustrations throughout this volume will 
give the reader a clearer and more comprehensive idea 
of these changes, which in a general way indicate quite 
accurately the shifting of the financial centers of Chicago 
during fifty years. 



[27] 



Cashier 



Assistant Cashier 








F. N. WILDER 





Assistant Cashier 










F. G. NELSON 



Assistant Cashier 



Manager Bond Department 







JOHN E. BLUNT JR. 



jBoam 



Manager Trust Department 



Manager Farm Loan Department 



Manager Foreign Department 



Manager Merchants' Loan and Trust 
Safe Deposit Company 



ALFRED L. GOLDSMITH 




Origin and Early History of The 
Merchants' Loan and Trust Company 



Origin and Early History of The 
Merchants' Loan and Trust Company 



1 



HE written history of this bank may be divided 
into three parts. The first is the story of 
its origin, the second its spirit and conduct 
in the Chicago fire of 1871, and the third its 
administration and development from the 
period of the great fire until its fiftieth anniversary in 
1907. The bank's historical data rescued from fire 
ruins are of course meager, and so the sources of infor- 
mation about its early history lack a vividness and 
detail which the chronicler of a later generation can not 
well supply. 

The creation of The Merchants' Loan and Trust 
Company was the protest of Chicago's soundest busi- 
ness men and financiers against the continuance of irre- 
sponsible and unscientific banking, and alike in behalf 
of merchant and laborer. To chronicle the creators of 
this bank is to list not a few of the builders of Chicago. 
It was in 1856 that among other prominent citizens the 
following came together to establish an institution that 
should subserve the mercantile and manufacturing 
interests of the Chicago of that day, and of the future 
Chicago which some foresaw: 
Walter Loomis Newberry, 
Henry Farnam, 
John High Dunham, 



Dr. John H. Foster, 

Isaac Newton Arnold, 

John Wentworth, 

Luther Haven, 

Mahlon Dickerson Ogden, 

F. B. Cooley, 

William E. Doggett, 

Edwin Blackman, 

Amzi Benedict, 

John High, Jr., 

Haines H. Magie, 

George Steele, 

Jonathan Burr, 

William B. Ogden, 

Augustus Harris Burley, 

De Villo R. Holt, 

George Armour, 

Grant Goodrich, 

Edward Kendall Rogers, 

Cyrus Hall McCormick, 

Asher Carter, 

Solomon A. Smith. 

Isaac Newton Arnold, the first clerk of the city of 
Chicago, was one of this bank's first trustees. In an 
era of expansion and repudiation, "he was known as an 
earnest pleader for saving the credit of Illinois by 
accepting in good faith, the whole burden which had 
been so unwisely laid upon it by the state representa- 
tives. Thenceforth he was universally regarded as a 
champion of public honor, a principled opponent of 
repudiation." He was several times in the state legis- 
lature, being elected in 1856 on the anti-slavery ticket. 
He served in Congress throughout the great Civil War. 
He introduced the momentous bill in Congress, pro- 

[32] 



hibiting slavery in every place directly subject to 
national jurisdiction, and with amendments it was 
enacted and became a part of the constitution of the 
United States. He was the biographer and friend of 
Abraham Lincoln whom he had truly known and 
supported in his public career. While an attorney and 
a man of letters generally, he was one of Chicago's 
distinguished citizens. 

Grant Goodrich was a prominent attorney, associated 
not only in the founding of this bank, but of North- 
western University. He was a judge of the Superior 
Court of Chicago. 

Mahlon D. Ogden was the brother of William B. 
Ogden. He was a lawyer, probate judge and business 
man, and one of this bank's first trustees. His was the 
sole house on the north side escaping the great fire. 
It was long an historic mansion. Its site is now 
covered by the Newberry Library. 

Dr. John H. Foster was a surgeon in the Blackhawk 
war, and a particularly efficient friend to the cause of 
education, both in the city and state. He was a mem- 
ber of the first board of trustees and rated as one of 
the wealthiest citizens of Chicago. 

The name of Luther Haven is preserved in the 
record of his services in development of the public 
school system of Chicago. He was president of the 
board of education and collector of the port under 
Presidents Lincoln and Johnson. 

John Wentworth was a New Hampshire man and 
graduate of Dartmouth College. Starting to Chicago 
in 1836, he completed the journey on foot from 
Michigan City. Soon after he became proprietor of 
Chicago's first newspaper, the Chicago Democrat, which 
he conducted until 1861. He was in Congress ten 

[33] 



years, and was twice elected as mayor of Chicago. In 
the panic of 1857, he stood for specie redemption. 
With these many activities he was also an attorney, a 
student of finance, and a director in Chicago's first 
railroad, the Galena and Chicago Union. 

William B. Ogden came to Chicago in 1835, exten- 
sively embarked in real estate, and became Chicago's 
first mayor. He stood for public credit in a precarious 
time, and in a large sense was a builder of Chicago and 
the northwest, putting energy and money into railroad 
development. When fire levelled Chicago, he was 
then residing east, but returned to the city of his 
greatest activities, and exhorted its people to believe in 
its future and to build afresh. He was one of the 
founders and a trustee of this bank in 1857. 

Walter L. Newberry came to Chicago from Con- 
necticut in 1833, entering business as a dealer in gen- 
eral merchandise. He was one of the founders of The 
Merchants' Loan and Trust Company, and for a long 
time was a trustee. He was also a director and 
president of the old Galena railroad, now a part of 
the Northwestern system. For six years he was presi- 
dent of the Chicago Historical Society. In 1841 he 
was active in founding the Young Men's Library 
Association of Chicago, making the first contribution 
of books to it. His monument in Chicago is the 
great Newberry Library. 

Francis B. Cooley was a merchant and head of 
the foremost dry goods house of its day, known as 
Cooley, Farwell & Co. He was one of the organizers 
of this bank and a trustee in 1857. 

Charles Hitchcock was a distinguished lawyer of 
Chicago. He was the president of the constitutional 
convention held in Springfield in 1869 and 1870. He 

[34] 



framed the present constitution of the State of Illinois. 
He was one of the organizers and incorporators of this 
bank. 

John H. Dunham was one of the foremost mer- 
chants of this city, prominent at the time because of 
the interest he took in the city's early improvements. 
His activities resulted in the building of Chicago's 
present waterworks system. He was the unrelentless 
leader in the fight directed toward the expulsion of 
foreign and local irredeemable paper currency then 
flooding the channels of trade. He was the first presi- 
dent of this bank, from 1857 until 1862. 

George Steele was a contractor and constructed a 
portion of the Illinois and Michigan Canal. He built 
the first steam elevator in Chicago to receive grain from 
the canal and railroads at the junction of North Frank- 
lin street and the river. He afterwards engaged in the 
produce and commission business and was president of 
the Chicago Board of Trade in 1852 and 1853. He was 
one of the founders and a trustee of this bank in 1857. 

Jonathan Burr was one of Chicago's most progress- 
ive men and one of its earliest philanthropists, leaving, 
as he did, his handsome fortune to public charities. 
He was a trustee in 1857, and vice-president from 1858 
to 1860. 

Haines H. Magie came to Chicago in 1832. He 
was in the mercantile business which he pursued until 
about 1 8 54, by which time he acquired an ample for- 
tune. His mercantile business bore the same relation 
to Chicago then as that of Marshall Field and Com- 
pany does today. He was vice-president of this bank 
from 1860 to 1862. He died in 1879. 

William E. Doggett was a wholesale merchant. 
Doggett, Bassett & Hill were the leading shoe dealers 

[35] 



in Chicago, being founded in 1846. He helped 
organize, in 1860, the Mercantile Association which 
did so much for the city's business interests in Chi- 
cago's early days. He was a trustee of this bank in 
1857 and, after retiring from business, served as vice- 
president from 1863 to J 876. 

Augustus H. Burley was a prominent merchant of 
early Chicago, conspicuously identified with its affairs. 
At the outbreak of the civil war he was active in organ- 
izing the Union Defense Committee. He was one of 
the organizers of this bank and a trustee in 1857; he 
continued to serve as a director until the time of his 
death in 1903. 

De Villo R. Holt as a young man had charge of 
his father's trading post at Mackinac Island. In 1847 
he came to Chicago and formed the firm of Foster & 
Holt, which was incorporated in 1888 as the Holt 
Lumber Company and is still extensively engaged in 
the lumber manufacturing business. He was one of 
the organizers of this bank and a trustee in 1857; he 
served as cashier from 1858 to 1862, when he resigned 
on account of his health and recommended as his suc- 
cessor Lyman J. Gage, who was then a bookkeeper in 
this bank. 

Amzi Benedict was a dry goods merchant, who 
shared in the establishment of the firm of Field & 
Benedict, about 1849, The house weathered the finan- 
cial storms of 1857 and 1861, and became recognized 
throughout the west as one of Chicago's strongest and 
most honorable houses. 

John High, Jr., about 1837 founded the dry goods 
house of Magie & High, and was one of the promi- 
nent merchants of the Northwest. He was one of 
the founders and first vice-president of The Mer- 

[36] 



Location of Bank when Established in 1857 
Northwest Corner South Water and La Salle Streets 



First Board of Trustees in 1857 




HENRY FARNAM 



ISAAC N. ARNOLD 





JONATHAN BURR 



WALTER L. NEWBERRY 



First Board of Trustees in 1857 




WILLIAM B. OGDEN 



JOHN H. DUNHAM 




DR. JOHN H. FOSTER 



First Board of Trustees in 1857 





WILLIAM E. DOGGETT 



FRANCIS B. COOLEY 




The Dickey Building in 1871 
Southwest Corner Lake and Dearborn Streets 




i 



chants' Loan and Trust Company. He died in 1857. 

Solomon A. Smith came to Chicago from Massa- 
chusetts in 1840, and at first became connected with 
Luther and Mathew Laflin, the country's largest 
makers of powder. He, succeeding John High 
Dunham in this bank's presidency in 1860, so con- 
ducted its affairs during a perilous time, that the city's 
leading historian has written of this financier: "As a 
banker and financier Mr. Smith was rated as one of 
the strongest of the strong, and to him is due the 
greater honor of upholding the commercial credit of 
our city, than to almost any other one man." 

Henry Farnam was from Connecticut, and one of 
the first board of directors of this bank, and its president 
from 1862 to 1863. He was the contractor for the 
building of the Chicago & Northwestern Railway and 
one of its presidents. 

Reputable sponsors stood for this bank at its legis- 
lative birth. In the senate the necessary bill was 
introduced by Norman B. Judd, more eminent still in 
later life as United States minister to Russia, by 
appointment of Abraham Lincoln. In the house 
Isaac N. Arnold also championed, together with Mr. 
Dunham and others, the measure which was to prove 
of no little significance to the welfare of a great city 
which was to be. On January 27, 1857, the bill came 
out of the legislature, to be duly approved on the fol- 
lowing day, January 28th, by Governor William H. 
Bissell; in the house of fifty-nine members voting, two 
only opposed the measure. 

This bank was incorporated as the Merchants' 
Savings, Loan and Trust Company, and its incorporators 
were: William B. Ogden, F. B. Cooley, N. P. Wilder, 
Henry Farnam, Samuel P. Officer, John High, Jr., 

[37] 



Erastus S. Williams, Henry W. Hinsdale, John W. 
Stanley, John P. Babcock, Charles Hitchcock, D. R. 
Holt, R. W. Officer, and associates. The capital of 
the company was fixed at $ 500,000, with liberty to 
increase the same to $2,000,000. The life of the cor- 
poration was fixed for a term of fifty years next suc- 
ceeding the first day of March, 1857. A grace of two 
years was also allowed in case the corporation, at the 
close of its operating period, should be in the process 
of closing up its affairs. The charter further provided 
that the management of the company should be by a 
board of trustees of at least nine in number, and that 
the stockholders in the corporation should be holden 
to the creditors for the amount of capital stock each 
held in the same. 

Empowered to begin business, the bank's organizers 
reached forth for a banking place and banking talent. 
Their progress is shown in the following news item 
published in the Chicago Daily Democrat, of May 5, 
1857. 

"A NEW BANKING INSTITUTION. 

"The stock necessary for the organization of the 
Merchants' Savings, Loan and Trust Company has all 
been subscribed. The directors have chosen J. H. 
Dunham, president, and A. G. Hammond, late of the 
Hartford Connecticut Bank, cashier, and propose 
opening the institution for business between the ist 
and 1 5th of June, in Geo. Steele's building, South Water 
Street. The capital of the institition is $500,000 with 
the liberty to increase the same to $2,000,000. 

"The trustees of the company are: 

"W. B. Ogden, 

"W. L. Newberry, 

"Jonathan Burr, 

[381 



"George Steele, 

"John High, Jr., 

" Henry Farnam, 

"John H. Foster, 

"Isaac N. Arnold, 

"D. R. Holt, 

"Wm. E. Doggett, 

"F. B. Cooley, 

"A. H. Burley, 

"J. H. Dunham." 

A month later on June 3rd, the same paper repeat- 
ing its announcement of Mr. Hammond's engagement, 
thus advised the public to look upon the new bank 
with confidence. 

"THE NEW BANKING INSTITUTION. 

"We learn that A. G. Hammond, Esq., cashier of 
the Hartford Bank, Hartford, Connecticut, retires from 
his position in that institution, to take the direction of 
the large joint stock bank of this city, for which a char- 
ter was obtained at the last session of the legislature. 
The institution is commonly known as Dunham's 
Bank. Some of our leading business men and heaviest 
capitalists are stockholders in this bank." (List of 
stockholders not quoted.) 

The Merchants' Savings, Loan and Trust Company 
bank opened for business on Wednesday, June 10, 
1 857, an event which received the following notice in the 
Chicago Daily Democrat, of June 12: 

"MERCHANTS' SAVINGS, LOAN AND TRUST COMPANY. 
"This banking institution, of which A. G. Ham- 
mond, Esq., is cashier and secretary, Hon. J. H. 
Dunham, president, and John High, Jr. Esq., vice- 
president, commenced business on Wednesday last. 

[39] 



The institution was chartered by the last legislature. 
The capital is $500,000, with the privilege to increase 
it to $2,000,000. Of this capital $150,000 has been 
paid up already, which will be increased at the rate of 
$100,000 per month, until the $500,000 is paid. 

"This institution has started under very flattering 
auspices, a large number of our wealthiest business 
men having taken stock. A large number of accounts 
have already been received, and in a few weeks at most, 
the bank will be in the full tide of successful operation 
and become one of the leading institutions of the city. 
The cashier, A. G. Hammond, is late of the Bank of 
Hartford, and it will be a good recommendation to our 
citizens generally to say, that he is a brother of C. G. 
Hammond, Esq., superintendent of the Chicago, Bur- 
lington and Quincy Railroad, and if his looks do not 
belie him, he will prove himself every way worthy of 
the relationship. The president and vice-president are 
well known as among our most wealthy and conserva- 
tive business men, who will take all possible care of the 
character and credit of the institution. 

" The establishment of the new bank created quite a 
little excitement among the bankers generally yester- 
day, and some pretty heavy drafts were made upon 
some of the larger and older banks to meet the require- 
ments of the new. 

"We understand that over $250,000 of the capital 
stock has been taken abroad, which will, of course, add 
so much to the available bank capital of the city." 

Under such encouraging auspices as are above 
described the new bank began business, and, in an 
advertisement in the Chicago Daily Journal, of June 
1 3th, thus solicited patronage: 

"Merchants' Savings, Loan and Trust Company, 

[40] 



having a subscribed capital of $500,000, with the 
privilege to increase the same to $2,000,000, with 
$100,000 in cash fully paid in, is, according to the 
provisions of its charter, prepared to buy and sell 
exchange on all the principal cities of the United 
States, and discount satisfactory business paper of 
short date. The executive committee will meet daily 
at twelve o'clock a.m., and persons applying for 
discounts will receive an answer at one o'clock p.m. 

"They will receive money for accumulation, allow- 
ing compound interest at seven per cent, per annum, 
when the amount is deposited for a number of years; 
receive and execute trusts by order of courts from 
estates, corporations and individuals, and also collect 
notes, drafts and acceptances payable in this city, and 
remit for same at current rate of exchange at maturity, 
and also make collections upon their points upon 
favorable terms. 

"Office corner of La Salle and South Water streets." 

Only once, so far as its knowledge and intentions 
go, has this bank been a disturber rather than a con- 
server. The event is noted in a money market 
bulletin of a Chicago paper, date of June 20, 1857: 

"The new bank just started in this city (Merchants' 
Savings, Loan and Trust Company), slightly disturbed 
the regular course of business on Wednesday, as its 
entire paid up capital, and a considerable amount in 
deposits, were drawn from the currency in general 
circulation and from the other banks, but, in a day or 
two, as these funds were re-discounted, this disturbing 
element regulated itself." 

Edwin S. Wells, a resident of Lake Forest, Illinois, 
was the first depositor in this bank. He opened 
number one account early on the morning of June 10, 



i857> an d since has maintained these business relations 
during half a century. In 1857 he was engaged 
in the wholesale grocery business on South Water 
Street, the firm name being Wells & Faulkner. Mr. 
Wells is now seventy-eight years of age and has retired 
from active business. 



[42] 



The Bank After the Chicago Fire in 
1871 



1 



The Bank After the Chicago Fire in 

1871. 

HE records of the transactions of corporate 
bodies are as unimpassioned as the brick 
books of Babylon, although between the 
lines are to be read the story of struggle, 
sometimes of a progressive success, some- 
times of cumulative disaster. The written history of 
The Merchants' Loan and Trust Company is happily 
devoid of sensations. It has metall perils incident to the 
business of banking with composure, and all crises with 
forethought and confidence disasters it has had none 
save that of the great fire of 1871, common to the 
whole community. When the financial storms of 1 873 
and 1893 were engulfing hundreds of banks, the ani- 
mating policies of its administration easily enabled it 
to move on without halting or hesitation, and, be it 
gratefully recorded, reinvigorated and with the increased 
confidence of Chicago's business world. 

One may not, however briefly, treat of the evolution 
of The Merchants' Loan and Trust Company without 
a searching glance at the volumes which so passively 
record the proceedings, month after month, year after 
year of the administrators of its work of its board of 
trustees drawn from Chicago's most representative and 
most successful business men, men of wisdom, conser- 
vatism, courage, and large affairs. These volumes are 
the minute books of the acts of directors who have 



[45] 



truly directed Chicago's oldest bank. From these 
records are herewith gleaned data which older Chicago 
citizens, with live, even affectionate memories, of con- 
temporaries who have guided the growth of this bank, 
can read with more than passing interest. 

The Merchants' Loan and Trust Company arose 
from its ashes after the great fire of 1871 in a manner 
most interestingly pictured to those who will read 
between the lines of the formal records which testify 
to the corporate acts necessary to a new start and 
continuation of business. A week after the fire, when 
resolve had become energized by the heat with which 
the bank's ruined pile had parted, there was held a meet- 
ing having the following official record. 

"Chicago, October 17, 1871. 

"A meeting of the Board of Trustees of The Mer- 
chants' Savings Loan and Trust Company was held at 
the residence of S. A. Smith, Esq. 

" There were present Messrs. Smith, Armour, Yoe, 
Tyrrell, Foster and Kellogg. 

" On motion of P. L. Yoe it was unanimously 
resolved that this Company open for general business 
this day. 

" On motion of John Tyrrell it was resolved that, 
in consequence of the loss of many books and papers of 
the Company, the president and cashier be authorized 
to use their judgment in the payment of balances by 
depositors. 

" On motion of P. L. Yoe it was resolved that 
Messrs. Ayer & Kales be employed as the attorneys 
of this Company. 

" On motion the Board adjourned. 

"CHARLES P. KELLOGG, Secretary." 



[46] 



The next step was thus recorded by the men who 
took it: 

"Chicago, October 20, 1871. 

"A meeting of the Board of Trustees of The Mer- 
chants' Savings Loan and Trust Company, held at 
their office in the residence of S. A. Smith, Esq., at 
ten o'clock a. m. 

" Present : S. A. Smith, Armour, Foster, Yoe, Kel- 
logg and Tyrrell. 

" On motion of P. L. Yoe, seconded by J. Tyrrell, 
it was unanimously resolved that the cashier and proper 
officers of this Company be, and they are hereby, 
instructed on being satisfied of the accuracy and justice 
of any claim or claims for balances on account of 
deposits at the time of the late fire, to enter up credit 
therefor to the person, persons, firm or company 
entitled to the same. 

" On motion of C. P. Kellogg, seconded by George 
Armour, it was resolved that the president, for this 
Company, unite with the Chicago Gas Light and Coke 
Company in the construction of a building on the cor- 
ner of Wabash Avenue and Hubbard Court, a portion 
of which shall be used as a temporary banking house 
for this Company. 

"JoHN TYRRELL, Secretary pro fern." 

Then came for judicious settlement an extraordi- 
nary matter. 

At the regular monthly meeting of the trustees, 
December 4, 1871, there being present Sol. A. Smith, 
Wm. E. Doggett, E. K. Rogers, H. H. Magie, John 
Tyrrell and John H. Foster, the cashier reported 
<c that most of the accounts of depositors had been 
settled and restored upon the books, but that there 

[47] 



still remained unsettled a number of accounts of depos- 
itors, the amount of whose claims was some $2 10,000; 
and that, if all these claims were settled and paid, the 
whole amount of deposits allowed would overrun the 
amount of deposits supposed to be held by us at the 
time of the fire some $58,500. 

"On motion of Wm. E. Doggett it was unani- 
mously resolved that, the board of Trustees having 
heard the report of the cashier as to the condition of 
the old deposit accounts, hereby desire to express their 
approval of the settlements already made, and at the 
same time record their opinion that it is to the interest 
of the institution that the claims remaining unadjusted 
be settled at the soonest possible day in such a manner 
as may be deemed best by the president and cashier, 
believing it better for the institution to suffer the loss 
estimated by the cashier (some $58,500) rather than 
be subject to any litigation in court." 

Pursuant to this resolution it was only a matter of a 
short time, before each and every claim had been satis- 
factorily adjusted and settled for all time to come. 

The history of American banking does not record 
another such example of mutual confidence and busi- 
ness honor. Depositors, without even a scrap of 
paper to prove their claims, were restored to a financial 
position, enabling them to resume business. 

In the foregoing way The Merchants' Loan and 
Trust Company settled its uninterrupted business har- 
moniously and efficiently after the great fire. When the 
eventful and destructive year of 1 871 had run its course, 
the cashier of the bank, made a report to its stock- 
holders which amounts to a more than ordinarily 
interesting page in the history of Chicago banking. 
In the main this report reads as follows : 

[48] 



Opening the Vaults of this bank after the Fire 
From a sketch made by Henry Reinhardt in 1871 







V 



Temporary Banking Quarters after the Chicago Fire 
Residence of Solomon A. Smith, Wabash Avenue, in 1871 



The Manierre Building in 1872 
Northeast Corner of Madison and Dearborn Streets 




. 



"Gentlemen, I beg to submit to you the usual 
statement of the condition of the affairs of your insti- 
tution on the evening of December 3Oth, 1871, being 
the closing of our fiscal year, viz.: 

STATEMENT TO THE STOCKHOLDERS OF THE 
MERCHANTS' SAVINGS LOAN AND TRUST COMPANY 

Liabilities 
Capital Stock ........ $ i ,000,000.00 

Due Depositors ...... 2,017,033.27 

" Banks and bankers 102,025.98 
" Unpaid dividends 5,454.23 

" Undivided earnings 535>57!'78 
" Surplus account . . 50,000.00 

$3,710,085.26 

Resources 
Bills discounted ...... $1,817,459.09 

Overdrafts and call loans 108,152.10 
United States 5/ 20 bonds 120,500.00 
Chicago water loan 7% 

bonds ............ 100,000.00 

Office furniture ...... 2,000.00 

Due by banks and bank- 

ers exchange .... 668,310.17 
Cash remittances .... 24,368.81 
Cash on hand in currency 733,8 1 8.93 
Cash on hand in checks 135,476.17 



"The foregoing is a correct statement of the assets 
and liabilities of your institution, except as to the item 
'due depositors.' When the remaining outstanding 
accounts and claims of a few depositors are adjusted, 
(the delay in the settlement of this having only been 

[49] 



occasioned either by the absence of the parties or the 
research for further proofs to substantiate the claims), 
this item will be increased by some $55,000, and this 
increase will have to be offset by a corresponding 
charge to profit and loss. 

"To better explain this discrepancy, it may be well 
to record here the trying and vexatious crisis through 
which your institution has had to pass in the last 
quarter. 

"As the great fire of October 8th was fast assuming 
a most alarming character, it found your president, 
Solomon A. Smith, Esq., and Mr. Lathrop, one of the 
book-keepers, promptly on hand at the office of the 
bank. The books of the institution were immediately 
placed in the book vaults and all were carefully closed. 
A few moments afterwards your cashier made his 
appearance, and a hasty consultation was held with the 
president as to what was deemed most advisable to do. 

"The danger to the institution was fully compre- 
hended at once, and no time was to be lost. It was 
well remembered that but a few years before our vaults 
were, at considerable expense, put in what was then 
believed to be the best of condition, and were then 
inspected and pronounced fire-proof by our architect. 
Our money and book vaults were consequently con- 
sidered equally safe, but, as a measure of greater 
prudence, it was resolved to direct at once all our 
efforts towards placing our money and other valuables 
beyond the reach of the destroying element. 

"The doors of the bank were closed behind us 
while the combinations and doors of our money vaults 
were open. The money, checks and bills discounted, 
with collaterals, were taken from our safe and, bur- 
dened with this precious load, not in the least intimi- 

[50] 



dated by the danger of being robbed by the mobs 
of the streets, all three started for a place of safety, 
after carefully closing all vault doors. Through 
streets filled with dense smoke and burning cinders, or 
obstructed by crowds of half demoralized people, your 
valuables were carried from station to station until 
they reached a place deemed sufficiently secure, some 
two miles from the starting point. 

"In the meantime another journey was made by the 
cashier and book-keeper to the bank, but the fire was 
then so close upon it that only a list of the numbers 
of our Government bonds and various balance sheets 
of general accounts could be carried off in hot haste. 

"On the following Tuesday morning, at the earliest 
possible time, the remains of the banking building 
were reached and work began at once to cool off our 
vaults, which were surrounded by fire. After three 
days, during which constant work and guard were 
kept upon the vaults, they were finally entered and 
the contents of the money vault were removed. 

" But, if we were so very fortunate in saving all our 
valuables, we were not so successful with our books. 
One of the large book vaults had given way to the 
heat and pressure of falling walls, and, to our utter 
consternation, we found many of our books, accounts 
and papers, to be burned and charred beyond any 
possible recognition. 

"This seemed to us then an almost irreparable 
calamity some six hundred accounts involving a sum 
of some two million of dollars, subject to call at a time 
when the public mind was disturbed and confidence 
seemed destroyed, to be still without a scrap of paper 
to indicate their condition. This surely was anything 
but encouraging. 



"However, on the morning of October 17, 1871, 
the first day any other bank reopened, your trustees 
convened and wisely resolved that the bank should 
open for business as usual that very morning, leaving 
to the president and cashier to settle all accounts as in 
their judgment they deemed best. Our money and 
valuables were counted and, with the aid of the figures 
of our other general accounts, the gross amount of our 
deposits ascertained and on that morning, October 17, 
1871, our office, improvised in the basement of Presi- 
dent Smith's residence, No. 414 Wabash Avenue, was 
opened for business. But under what difficulties ! 

"We had scarcely any room to accommodate the 
large number of our customers, we had scarcely any 
counters or books to keep our accounts apart; we began 
to receive deposits and pay out. Contrary to what 
under the circumstances might have been expected, 
the close of that day's business found us with more 
cash on hand than we had at the opening. This was 
highly satisfactory, as it clearly showed that all our 
troubles had in no wise shaken the confidence of our 
depositors in us. Our clearings with other banks, 
involving the payment of some $300,000 of checks, 
were effected without the loss of a cent to the bank. 

"In accordance with a printed notice in our several 
dailies, our depositors brought in their accounts for 
verification, as rapidly as possible. Every account 
was accompanied by proofs and affidavits as to its cor- 
rectness, and when deemed conclusive was admitted at 
once and passed upon by placing the amount claimed 
to the credit of the party. 

"As to the nature and value of our bills discounted, 
I will refer you to the report of our last examining 
committee which is also presented today, and I trust 

[521 



that nothing but great satisfaction can be derived from 
that direction. 

"In summing over a vast amount of labor on the 
part of your clerks, your president and cashier and the 
advisory assistance of your trustees, it affords me much 
gratification to be able to present to you the accom- 
panying statement, showing clearly that we have accom- 
plished what was deemed by most certainly a very 
difficult and even by many a good business man an 
almost impossible task, to-wit : the re-establishment of 
all our books and accounts and the restoration of our 
business in its former smooth-running order; all that 
within a few weeks and without the interruption of a 
single day's business after the reopening of the bank, 
October 17, 1871. 

"All of which is respectfully submitted. 

"(Signed) CHARLES HENROTIN, Cashier." 



[53] 



FIRST STATEMENT OF CONDITION OF CHICAGO 

Banks Capital 

First National Bank, .... $1,000,000 

Third National Bank, . . . 750,000 

Union National Bank, .... 750,000 

Fifth National Bank, .... 500,000 

Commercial National Bank, . . . 500,000 

Manufacturers' National Bank, . . 500,000 

Northwestern National Bank, . . 500,000 

Corn Exchange National Bank, . . 500,000 

German National Bank, . . . 500,000 

Merchants' National Bank, . . . 450,000 

Cook County National Bank, . . 300,000 

National Bank of Illinois, . . . 300,000 

Mechanics National Bank, . . . 250,000 

City National Bank, .... 250,000 

National Bank of Commerce, . . 250,000 

Fourth National Bank, .... 200,000 

Traders' National Bank, . . . 200,000 

Second National Bank, .... 100,000 

Union Stock Yards National Bank, . 100,000 
Total National Banks, . . $7,900,000 
Merchants' Savings Loan and Trust Co., 1,000,000 

State Savings Institution, .... 105,000 

Lunt, Preston & Kean, . . . 100,000 

Prairie State Loan and Trust Company, . 100,000 

Union Insurance and Trust Company, . 125,000 

International Mutual Trust Company, 200,000 

Commercial Loan Company, . . 100,000 

Other Banks, not including Savings Banks 

or Bank of Montreal, . . . . 1,250,000 



Compiled from official statements of December 31st, 1871. 



$IO,880,OOO 



[54] 



BANKS FOLLOWING THE GREAT FIRE OF 1871. 



Surplus and 
Undivided Profits 


Deposits 


Loans and 
Discounts 


1468,607.06 


$3,455,639-93 


$2,051,669.41 


3i9, J 55-53 


3,107,464.67 


2,611,483.35 


404,564.79 


4,870,188.20 


2,768,230.43 


i37,567-35 


i,o75,759-63 


863,623.89 


1 70.734-9 i 


1,725,326.95 


1,204,861.36 


43,502.28 


1,359,625.91 


1,058,728.02 


256,123.64 


1,129,870.50 


1,223,433.00 


41,213.37 


916,457.84 


636,065.32 


81,915.16 


1,672,434.95 


946,420.22 


481,875.14 


i,439,564-83 


1,051,917.28 


2,812.56 


603,127.19 


576,420.66 


790.76 


574,731.23 


343,448.26 


149,390-7! 


777,076.48 


758,193.44 


62,564.97 


739,106.88 


598,627.16 


20,749.82 


433,239- 01 


380,917.27 


45,7!9-49 


360,164.80 


265,616.26 


6i,33!-99 


692,888.98 


480,847.27 


54,355-57 


848,143.26 


542,400.79 


22,602.05 


323,572.19 


153,036.58 


$2,825,577.15 


$26,104,383.43 


$18,515,939.97 


530,571.70 


2,174,059.25 


1,925,611.19 


55,000.00 


3,569,154.12 


1,727,976.14 


25>3i7-i3 


983,948.95 


353,541.64 


13,569.08 


652,867.53 


382,823.33 


21,951.50 


369,429.74 


308,858.11 


20,000.00 


335,157.22 


341,678.24 


19,137.09 


279>536.54 


239,278.54 




2,750,000.00 


2,5OO,OOO.OO 



$3,511,123.65 $37,218,536.78 $26,295,707.16 



[55] 



Men and Acts of an Important Era 
1871-1907 



Men and Acts of an Important Era, 

1871-1907. 



1 



HE official record of The Merchants' Loan 
and Trust Company, from the day when 
the cashier entered his interesting story of 
the great fire of 1871 upon the minute 
books, to the day of the bank's semi-centen- 
nial, is the record of a bank whose evolution has been 
peculiarly one of progressive conservatism. The bank 
has grown with Chicago, and has contributed to Chi- 
cago's growth. In this generation new banking con- 
ditions, to meet the requirements of the trade and 
industry of this seething, ever-changing, metropolitan 
city of Chicago, require "specialized banking." In 
this respect The Merchants' Loan and Trust Com- 
pany has not only kept abreast of the times, but it 
has, in many ways, anticipated the future. 

The story of this era, barren though it be of sensa- 
tional events, may find many a sympathetic reader 
among those surviving thousands who remember with 
pride the more than common personalities who guided 
this bank out of the dark ages of empiricism, and, 
themselves foundation stones of this metropolis, 
entrusted The Merchants' Loan and Trust Company 
to no less substantial forces. 

The stockholders of The Merchants' Loan and Trust 
Company, at the meeting of January 2, 1872, being 
the first gathering of the owners of the bank after the 

[59] 



great fire, gave over the uninterrupted business and 
administration of the bank to the following trustees: 
Solomon A. Smith, William E. Doggett, George 
Armour, E. Kendall Rogers, Peter L. Yoe, Augustus 
H. Burley, Charles P. Kellogg, John Tyrrell, Edwin 
Blackman, Haines H. Magie, and Elias T. Watkins. 

At the meeting of the trustees April 4, 1876, there 
was a vacant chair, and to their departed colleague, 
William E. Doggett, his associates paid tribute, for- 
mally characterizing him, who for fourteen years had 
been its vice-president, as a faithful and efficient officer 
and a valued friend. Into his place by unanimous vote 
of the board stepped John Tyrrell. 

On May 22, 1876, the bank's administration 
received powers to uphold Chicago's good name. 
The incident is reflected in an order of the board 
authorizing the president "to lend the city of Chicago 
any sum which in his judgment he thinks advisable, 
the loan to be made with a view of assisting the city 
towards preventing its certificates of indebtedness 
from going to protest." 

On April i, 1878, Charles Henrotin retired from 
the office of cashier and secretary, and soon thereafter 
Henry E. Lowe was made his successor. 

The successful career of The Merchants' Loan and 
Trust Company has been under a state charter and 
state supervision. It might have been a national bank 
by conversion, but it did not become one. What it 
might have been matters not, for a half-century of 
success does not invite a retrospective study of alterna- 
tives. And yet it might have become a national bank 
as a board order of January 7, 1879, interestingly 
witnesses. In brief, this order empowered the bank's 



[60] 



Former Directors 




MARSHALL FIELD 



Former Directors 



CYRUS H. MCCORMICK, SR 




GEORGE M. PULLMAN 



Former Presidents 




SOLOMON A. SMITH 





JOHN TYRRELL 



r 



JOHN W. DOANE 




administration "to enquire into the expediency of 
organizing a national bank under the acts of Congress, 
and of transferring to such organization the business 
of this Company," etc., etc. 

The memorial records of an institution do not 
vividly portray events or men that made them, but 
in recording the death of their colleague, Haines 
H. Magie, the trustees at their meeting of January 
22, 1879, spoke of him as fulfilling the position of 
trustee in a "conservative and careful manner," as 
being "a genial and pleasant associate," and, again, as 
a citizen "long identified with the city's growth and 
prosperity, and one who lived an honest, upright and 
just life." 

It was in the same year, 1879, on November 28th, 
that the trustees met to confess their debt to their 
deceased president, Solomon A. Smith. This they 
did in terms of respect and esteem, as to a fellow 
trustee and banker, as to a man and citizen, to which 
tribute was further added this: "our company has lost 
one who, long identified with its business, has always 
faithfully and with great ability administered its affairs." 
On January^ 188 1, John Tyrrell became his successor. 

Faithful men went out and faithful men came in. On 
June 7, 1870, Frank C. Osborn was chosen assistant 
cashier. It was in this year, in March, that the 
quarterly dividend of this bank was raised to three 
per cent. 

At the meeting of stockholders, January 6, 1880, 
Byron L. Smith first became a trustee, and on January 
4, 1 88 1, he was elected vice-president of the bank. 

The incorporators of this bank, contemplating its 
exercise of several functions, were authorized by 
charter to name the institution The Merchants' 



[61] 



Savings, Loan and Trust Company. But, the de- 
partment of savings continuing undeveloped, it was 
determined at a meeting of the stockholders April 
26, 1 88 1, that the original name should be changed to 
that which, for nearly a generation, it has borne with 
increasing distinction in the world of banking. With 
the increase of the bank's business it became expedient 
to increase its resources to the limit prescribed for its 
capital stock in its charter, and, accordingly, on January 
14, 1882, the directors amplified their banking facilities 
by an order increasing the stock of the company to 
its lawful maximum, that is, to $2,000,000. 

In 1883 two good men passed forever from the 
counsels of the bank. On May yth the directors 
recorded their loss in the decease of Edward K. Rogers, 
and on November 5th took similar action in memory 
of Palmer V. Kellogg. On December 17, 1883, 
Henry E. Lowe, secretary and cashier, moved to 
retirement by ill health, left the service of the company, 
which he had faithfully served in various capacities 
for twenty-five years. 

On January 8, 1884, John W. Doane became 
president of the bank. 

On February 4th of this same year, the vacant 
office of cashier and secretary was filled by the election 
of Frank C. Osborn. Two days later, February 6, 
1884, Orson Smith was unanimously elected by the 
directors to be second vice-president of The Merchants' 
Loan and Trust Company. Mr. Smith had become 
the first incumbent of this office in this bank, inas- 
much as at this same meeting it had been created 
by an amendment to the by-laws. 

The pressure for a greater development of the 
bank's trust business appears in an order of the 

[62] 



trustees, April 6, 1885, declaring that "the company 
has been requested to accept sundry trusts," and 
authorizing the executive committee, in its discretion, 
to accept trusts for the best interests of the company. 
Prior to this, however, and as early as July, 1880, the 
bank had accepted trusteeships for bonds issued under 
mortgages. 

At the annual meeting of the stockholders, January 
5, 1884, Cyrus H. McCormick, Jr., was elected to the 
board of trustees, taking the place of his father, inven- 
tor and captain of industry. On April 13, 1886, his 
associates of the board recorded their appreciation of 
Edwin Blackman, deceased. 

As the bank grew, new men came into its adminis- 
tration to enlarge its powers and broaden its policies. 
On January 6, 1890, the directors ordered the enlarge- 
ment of the board from eleven to thirteen members, 
and on the succeeding day the following men were 
elected by the stockholders to become the new larger 
board of trustees of this bank. 

Augustus H. Burley, 

John W. Doane, 

Cyrus H. McCormick, 

John Tyrrell, 

Peter L. Yoe, 

Lambert Tree, 

John De Koven, 

Marshall Field, 

George M. Pullman, 

Elias T. Watkins, 

Albert Keep, 

Erskine M. Phelps, 

Orson Smith. 

When Chicago girded herself for her colossal and 

[63] 



triumphant achievement, the World's Columbian Ex- 
position, its creators received from this bank $15,000, 
the act of the bank's officers making this subscription 
being ratified by the directors, April 7, 1890. In 
further promotion of the financing of this vast under- 
taking, the directors, on October 3, 1892, authorized 
subscription for the six per cent debenture bonds of 
the Fair, then assuming appreciable structural form, 
such investment, however, not to exceed the par value 
of $200,000. On November 6, 1893, the directors 
ordered the following disposition of the bank's stock 
subscription to the glorious venture: 

"Resolved, that the 1500 shares of the World's 
Columbian Exposition stock belonging to the bank be 
donated to the Columbian Museum of Chicago, subject 
to its organization, and that the stockholders of The 
Merchants' Loan and Trust Company be requested to 
ratify same at the next annual meeting. And should 
same not be ratified by the stockholders, then this 
board as individuals take the responsibility of the same 
by furnishing payment at the market value of the 
stock." The stockholders duly ratified the action of 
the board. 

On March 2, 1891, F. N. Wilder was appointed 
assistant cashier. On March 17, 1892, the directors 
accepted the resignation of P. L. Yoe as vice-president, 
and filled the vacancy by election of Orson Smith. On 
January 7, 1895, the directors secured the services, as 
second vice-president, of E. D. Hulbert, at that time 
cashier of The First National Bank of Winona, Minn. 

On February 13, 1895, J. G. Orchard was appointed 
cashier of the bank in place of Frank C. Osborn, 
deceased, for thirty years an exemplary employe of the 
bank. 



[64] 



On June 6, 1896, the auditor of public accounts of 
the State of Illinois, renewed the charter of The Mer- 
chants' Loan and Trust Company for ninety-nine years. 

On January 7, 1897, J. W. Doane, having 
announced that he felt compelled to decline acceptance 
of another term of office, the vice-president, Orson 
Smith, therefore fulfilled the functions of the office 
until his actual election thereto later on. 

When, in 1897, death claimed George M. Pullman, 
his colleagues on the board of directors of this bank, at 
a meeting, October 22, expressed themselves in the 
following comprehensive memorial: 

" Resolved, that the members of the board of direc- 
tors of The Merchants' Loan and Trust Company have 
received with profound sorrow the intelligence of the 
death of their late colleague, George M. Pullman, whose 
business skill, sound judgment, and enlightened coun- 
sel were greatly appreciated by the board in the dis- 
charge of the duties devolving upon it; that they 
deplore his loss, and while cherishing with the highest 
pleasure the remembrance of their association with him 
as a trustee and director, take equal pride, in common 
with his fellow citizens of Chicago, in the great position 
he achieved during his life as a useful, public spirited, 
and beneficent man." 

On January 4, 1898, there was elected to the board 
of directors, Moses J. Wentworth and Edmund D. 
Hulbert, in place of George M. Pullman and John 
Tyrrell. 

Another faithful custodian of high trusts finished 
his watch when Peter L. Yoe died in 1898. On April 
6, his associates recorded their loss, and on May 3, 
again testified to the removal of a staunch link from their 
chain in the death of John De Koven. 

[65] 



On June 9, 1898, Enos M. Barton was elected to 
the vacancy in the board of directors. 

At a meeting of the directors April 3, 1901, the 
death of John W. Doane was recorded with fitting 
words in recognition of his services as president and 
director of the bank. 

On April 2, 1903, the directors rilled a vacancy in 
the board by the addition of Elbert H. Gary to its 
membership. 

Another step in the bank's development was taken 
when at a meeting of the stockholders, June 9, 1903, 
capital stock of the company was ordered increased 
from $2,000,000 to $3,000,000. 

January 5, 1904, the directors characterized their 
affectionate regard for their colleague, Augustus H. 
Burley, who had been a director since the organization 
of the bank in 1857, in the following words: 

"He has seen the beginning of the bank and 
watched its growth, and in all its stages of develop- 
ment as a financial institution of the city of Chicago, it 
has had the benefit of his conservative counsel and 
sound judgment. Ever ready and most conscientious 
and enlightened in performance of his duties as director 
of The Merchants' Loan and Trust Company, he was 
equally so in the public positions, state, county and 
municipal, to which people at different times, during 
his career, assigned him. We mourn him therefore 
not only as a colleague, but also as a citizen and a pub- 
lic officer, who set a high example to his fellows." 

At this same meeting of the board another of the 
stalwarts received the tribute of the good and faithful 
servant in the person of Elias T. Watkins. 

At the meeting of the stockholders, January 5, 
1904, there were elected to the board of directors 

[66] 



T. J. Lefens, Clarence A. Burley, and Chauncey Keep. 

On April 6, 1906, the directors placed upon the 
records this tribute to their late colleague, Marshall 
Field, who had shared in counsels of the bank so many 
years, and was at the time of his death the oldest liv- 
ing director in point of service. 

"The members of the board of directors of The 
Merchants' Loan and Trust Company wish to express 
their profound sorrow for the loss which has come to 
the board and to the bank by the death of Marshall 
Field. 

" Mr. Field became a stockholder of The Merchants' 
Loan and Trust Company in 1876, and a member of 
its board of directors January 2, 1877. At his death 
he was the last survivor of the board elected at that 
time and had been longer a director than any man now 
living. He largely aided in the development and the 
growth of the bank, and was always ready to assist and 
support its- officers and assume responsibility in the 
important matters upon which he was consulted. 

"It is given to few men to attain such great success 
and leave a reputation unsullied and honorable, and few 
there are, whose career is such an example of what may 
be accomplished by upright conduct, combined with 
great ability. In the death of Marshall Field the com- 
munity has lost a high-minded and conscientious 
citizen, this bank an able and wise director, and his 
colleagues a prudent counselor and friend." 

While these resolutions are the tribute of personal 
friends and bank associates, they reflect the sentiments 
of the press and public, as expressed at the time of his 
death. 

On November 7, 1906, John S. Runnells was 



[67] 



elected as a director to fill the vacancy on the board 
which was caused by the death of Marshall Field. 

The foregoing in briefest form sketches the evolu- 
tion of this bank from the day of the great fire to the 
present time. Such a chronicle of events, in this era 
of large and startling transformations in business 
and finance, may seem commonplace, but it is really 
not so, for these events are the occasional markers 
to the well-ordered march of a bank of many depart- 
ments and more than ordinary banking powers; the 
whole being the product of wise management shaping 
internal growth in a time characterized by expansion 
through combination. Every watchman of the old 
guard who dropped from the ranks in the past 
generation receiving, as above suggested, the tribute 
of his colleagues was a potent Chicago fact, his life 
and service a monument to good banking and good 
citizenship. He and his predecessors it was who did 
so much to make the state bank a tower of strength in 
Illinois. To him honor. 

To read the names of the builders of this bank who 
have passed away is to read the names of those well up 
toward the top of Chicago's roll of honor. Among 
them are men who have acquired international reputa- 
tion and contributed largely to the prosperity of this 
city. 

George Armour established the firm of Armour, 
Dole & Co. in 1860 and engaged in the grain and 
commission business, the outgrowth of which was an 
extensive line of grain elevators on the railroads radi- 
ating from Chicago and which established Chicago's 
early supremacy as a grain center. He was president 
of the board of trade in 1875, anc ^ was popularly 
known as the father of the grain elevator system. He 

[68] 



Former Directors 




JOHN HIGH, JR. 






E. KENDALL ROGERS 






HAINES H. MAGIE 




Former Directors 




EDWIN BLACKMAN 



Former Directors 




EI.IAS T. WATKINS 



Former Cashier One of the Founders of this 
Bank The First Depositor 



was a director of this bank at the time of the great fire 
and retired in 1881. 

Charles P. Kellogg was associated with his father in 
the wholesale clothing business; the firm in 1868 was 
known as C. P. Kellogg Co. In 1870 he, with other 
prominent merchants, organized the Commercial Club. 
He was a director at the time of the Chicago fire and 
served until 1881. 

Edward Kendall Rogers was in the wholesale iron 
and coal business. The firm was established in 1840. 
He was one of the organizers of the Chicago Board 
of Trade and a director of this bank for over twenty 
years, retiring in 1883. 

Palmer V. Kellogg was a wholesale clothing mer- 
chant and established the house of P. V. Kellogg in 
1859. After retiring from active business he was a 
director in this bank for many years, retiring in 1883. 

Frank C. Osborn began his business career as a 
young man with this bank, and owing to his ability 
and fidelity was promoted from time to time. He 
served as cashier from 1884 to l %95' 

George M. Pullman was the founder of the Pull- 
man Palace Car Company, now known as the Pullman 
Company. This concern was the first in the world to 
engage in the building of "sleeping, hotel and palace 
cars." The name Pullman has become intimately asso- 
ciated all over the world with luxurious travel. He 
built the town of Pullman, Illinois, as a home for his 
great enterprise; he was an idealist as well as practical 
producer and his great desire was to surround his 
workmen with model working conditions. He was a 
director of this bank from 1 88 1 until his death in 1897. 

Peter L. Yoe was vice-president of this bank from 
1885 to 1892; he served as a director for twenty-six 

[69] 



years until the time of his death in 1898. During the 
great fire of 1871 his house on Terrace Row was a 
temporary refuge for the cash and valuables of this 
bank. 

Edwin Blackman was associated for many years 
with Magie & High; he had extensive real estate 
interests in the city. He served as a director for over 
sixteen years and until the time of his death in 1886. 

John DeKoven began his business career in Chicago 
with I. H. Burch & Co., bankers, and during his life 
was a banker. He was identified with many of Chi- 
cago's leading banks and served as a director of this 
institution from 1881 to 1898. 

John Tyrrell was a prominent merchant of early 
Chicago. The firm of Burley & Tyrrell still continues 
the business. He was a director of this bank at the 
time of the fire and later served as vice-president from 
1877 until 1 88 1, and as president from 1881 to 1883. 
He retired from the board of directors in 1898. 

John W. Doane came to Chicago in 1855 and started 
the business which afterwards became John W. Doane 
& Company, wholesale importers. Retiring from active 
commercial business, he became identified with this 
bank, first as a director in 1880 to 1901 and later 
serving as president from 1884 to 1897. 

Elias T. Watkins was a progressive man, con- 
stantly working for the city's improvement; he gave 
to Chicago its first gas company, known then as the 
Chicago Gas Light and Coke Company. He was a 
director of this bank for over thirty years, until his 
death in 1903. 

Cyrus H. McCormick, Sr., was a Virginian. Before 
becoming of age he had invented improvements in three 
different agricultural implements. At twenty -five, 

[70] 



in his father's shop and with his own hands, he made 
his first reaper. With the help of father and brothers 
the business grew to ten machines a year. The first 
consignment of machines to the west came in 1844 
from Virginia via New Orleans and the Mississippi 
and the Ohio rivers. In 1847 ne came to Chicago. 
In 1848 he built 700, and in 1849 over 1500 reapers. 
In 1851 Mr. McCormick, at the World's Fair in 
London, gave the old world his new idea. He 
triumphed, his reaper being pronounced by the London 
Times to be worth the whole show. When he pleaded 
for his American patent, his representative declared 
that the McCormick reaper brought an annual income 
to the United States of over $55,000,000, and moved 
the line of civilization westward thirty miles a year. 
France officially told this American that he had done 
more for the cause of agriculture than any other living 
man. His manufacturing works fell before the 
fire but to rise and become what all men know them 
to be today. He was an organizer of this bank and 
a stockholder until his death in 1884. 

Marshall Field was born in 1835 and came to Chi- 
cago when twenty years of age. He began his business 
career as a clerk in 1856 with the firm of Cooley, 
Wadsworth & Co. Four years later he was admitted 
as a partner and the firm became Farwell, Field & Co. 
In 1865 he withdrew and then organized the firm of 
Field, Palmer & Leiter. Potter Palmer retired 
in a short time, the firm became Field, Leiter & Co., 
continuing for fifteen years, and afterwards became 
Marshall Field & Co. in 1881. The growth of his 
wholesale and retail business made him pre-eminently 
the merchant prince of the world. He was identified 
in innumerable ways with the upbuilding of this city. 



He was recognized as Chicago's leading citizen and a 
generous philanthropist. He acquired wealth and was 
rated as one of the rich men of America. He was 
a director of this bank and influenced its affairs from 
1877 to the time of his death in 1906. He made The 
Merchants' Loan and Trust Company one of the 
executors and the final trustee of his estate. 

Albert Keep was a director of The Merchants' 
Loan and Trust Company from 1884 until the time 
of his death, May n, 1907. In 1851 he estab- 
lished a wholesale dry goods store in Chicago, under 
the name of Peck, Keep & Co. In 1856 he devoted 
himself to investments. In 1864, after the successful 
promotion of important interests for leading railways, 
he became a director and member of the executive 
committee of the Lake Shore road. Nine years later, 
as president of the Chicago and Northwestern road, he 
entered upon the development of that property. He 
was a director of the Chicago Home for Incurables 
and the John Crerar Library. 



[72] 



Long Time Employees 





ISAAC H. PERVIER 



JOHN M. OOSTERBECK 




Long Time Employees 




WILLIAM DENT BEALL 





CHARLES. L. GARY 



ROBERT N. WARD 



Long Time Employees 





ISAAC W. BROWN 



WILLIAM B. HALL 




Early Banking in Illinois 



1 



Early Banking in Illinois 

HE organization of The Merchants' Loan and 
Trust Company fifty years ago was reaction 
from the insane to the sane, from the empir- 
ical to the approximately scientific. How 
opportune, how necessary even, became the 
inauguration of the kind of banking to be introduced 
by this bank will be inferred from the reading of a 
sketch of the characteristics of early banking in Illi- 
nois. 

Banking in pioneer Chicago was barter white man, 
red man, guns, beads, blankets, etc., for the products 
of forest and stream. It was that old inhabitant of 
historic activities, Gurdon S. Hubbard, who seems to 
have inaugurated the rudimentary processes of Chi- 
cago's banking business, when, upon some older settle- 
ment east of Chicago, Buffalo for instance, he drew his 
bill of exchange for the promotion of trade between the 
frontier village of Chicago and the older and capitalistic 
east. In this early period silver coin was the chief 
currency; the only paper money in use, being the 
improvised scrip with which an Indian trader satisfied 
the white men and red men constituting the business 
world of primitive Chicago. 

In 1809 the Territory of Illinois was set off from 
Indiana, and the seat of government was set up at 
Kaskaskia, Nathaniel Pope, a Kentuckian, becoming 
secretary of the new territory. The whole vast domain 
was divided into just two counties, being Randolph on 

[75] 



the north, and St. Clair on the south. In 1816 Pope 
became Illinois' delegate in Congress and when, in 
1818, the bill for Illinois' admission came up, and the 
vital matter of the new state's northern boundary arose, 
it was Delegate Pope who got the northern line fixed 
at the parallel, forty-two degrees thirty minutes, north, 
and so gained for the new state, contact with Lake 
Michigan, and that supreme geographical advantage 
for its forthcoming yet unforseen metropolis which, 
more than any one single condition, is steadily 
upbuilding Chicago as the nation's commercial capital 

So, by a masterly modification of the famous ordi- 
nance of 1787, when the Territory of Illinois became a 
State, the petty trading -post beside river and lake 
became incorporated in a commonwealth of incalculable 
possibilities. Delegate Pope had a large vision for his 
time, for he saw an element of national strength in the 
geographical position of the lake states, and he fore- 
saw a canal between the lake port, Chicago, and the 
Illinois River; but with all his foresight he built larger 
than he knew, and the sequel to his statemanship is 
partly demonstrated in the banks and banking, founded 
upon the production of the continent's primary pro- 
ducts, and their distribution through the world's 
greatest railway center and fresh water port. 

On December 3, 1818, Illinois was formally 
admitted into the union. As early as 1816 there was 
passed an act by the territorial legislature incorporating 
at Shawneetown the "President, Directors and Com- 
pany of the Bank of Illinois." This was Illinois' 
first legalized "wild-cat." When the State's constitu- 
tion was adopted, August 26, 1818, Illinois had two 
banks in operation, that is to say, the bank at Shawnee- 
town and one at Edwardsville, the latter already 

[76] 



moribund. Both these banks carried the public moneys 
received from the sale of Illinois lands. The new 
State of Illinois incorporated its first State bank March 
22, 1819, under the title of the "President, Directors 
and Company of the State Bank of Illinois." And 
this begins the instructive experience of the State of 
Illinois as a banker. 

The amount of capital was limited to $500,000, all 
of which was owned by the State, which through the 
legislature was invested with its entire management 
and control. The president and directors were to be 
elected by the Senate and House of Representatives 
on a joint ballot, and the cashiers appointed by a 
majority of the directors. The property, lands, and 
faith of the State were pledged without any restrictions 
for the redemption of the bills issued, and the State 
was pledged at or before the expiration of the ten 
years (the time of its charter), to redeem all bills pre- 
sented in gold or silver. The bills were declared legal 
tender for all debts due the State. The school fund 
and all specie, or "land-office money," were required 
to be deposited in the principal bank. 

Two thousand dollars was appropriated to procure 
plates and start the financial institution on its career 
of beneficence. Three hundred thousand dollars was 
to be put into circulation. It was to be distributed in 
the several districts in ratio to the population. The 
bills were to be loaned on notes, secured by mortgage, 
at the rate of six per cent, per annum. As the bills 
themselves bore an interest of two per cent, per annum, 
the borrower virtually paid but four per cent, for his 
money. No person was entitled to a loan of more 
than $> 1,000. 

The officers of the bank were entitled for their 



[77] 



services, to banking accommodations on approved 
security, at two per cent, per annum, in the following 
amounts: president of the principal bank, $2,000; the 
president of each branch, $1,000; and each director, 
$750. Four branches were established, at Edwards- 
ville, Madison County; at Brownsville, Jackson County; 
at Shawneetown, Gallatin County; and at the seat of 
justice in Edwards County. 

The currency soon flooded the State and all gold 
and silver disappeared as a circulating medium, and, as 
was quite natural, did not enter the vaults of the wild- 
cat bank or any of its branches. The money was 
scarcely in circulation before it depreciated to seventy 
cents on the dollar, then to fifty, and so on down to 
twenty-five cents, when it disappeared from circulation 
and found its way into the hands of shrewd speculators, 
who looked to its ultimate redemption by the State. 

There was subsequently a special law passed, legal- 
izing the payment of the officers of the State Govern- 
ment in this depreciated paper at its current value. 
As under the terms of the charter, all taxes and 
revenue of the State were payable in these bills, the 
State at last became hopelessly entangled in its own 
financial system and was forced to withdraw the circu- 
lation. This was begun in 1824, but the currency 
continued to circulate until the expiration of the 
charter in 1831, when the State closed its banking 
business at a loss exceeding the full amount of the 
original issue. Governor Thomas Ford, in his history 
of Illinois, summed up the result as follows: 

" In the course of ten years, it (Illinois) must have 
lost more than $150,000, by receiving a depreciated 
currency, $150,000 more by paying it out, and 
$100,000 of the loans which were never repaid by the 

[78] 



borrowers, and which the State had to make good, by 
receiving the bills of the bank for taxes, by funding 
some at six per cent, interest, and paying a part in 
cash, in the year 1831. 

"In closing up the affairs of the bank the State 
borrowed of one Samuel Wiggins, January 29, 1831, 
the sum of $100,000. 

"It is stated by contemporary writers that the shrewd 
and provident Wiggins paid over a large part of the 
loan to the State in bills of the old State Bank, which 
had been bought up by him at a low price and which 
the State now redeemed at par. The loan was at the 
time extremely unpopular, and threats of repudiation 
were rife for years afterwards. It was, however, paid 
ultimately, principal and interest, and the credit of the 
State saved from blemish." 

Peace, following the Indian disturbances known as 
the Blackhawk War, set a tide of Eastern emigration 
through Chicago where many pioneers tarried and so 
augmented its population that in 1 845 there were resi- 
dent here 3,265 active and busy people. The need of 
a bank was felt, a bank of issue, a bank to make money, 
nor was the need less stringent under pressure of the 
passion for land speculation sweeping the country from 
east to west. 

To meet an obvious want, the legislature of the 
State extended the charter of the Shawneetown Bank, 
and, on February 13, 1835, incorporated another 
State Bank, " The President, Directors and Company 
of the State Bank of Illinois," with life to run until 
January i, 1860. Its capital was to be $1,500,000. 
It was, however, provided that the capital stock might 
be increased $1,000,000 more by individual subscrip- 
tions. 



[79] 



This bank was to be in Springfield with not more 
than six branches at other points ; this number, how- 
ever, being increased the next year to nine, and the 
time for redemption of its bills without forfeiture of 
charter being extended from ten to fifty days. 

This new state bank was not a bank managed by 
the State as had been the first state bank of Illinois, 
although by payment of $100,000 for stock reserved, 
it was authorized by appointment of the governor, to 
have two directors on the bank's board. It was one 
of the branches of this new state bank which became, 
in 1835, Chicago's first bank. 

The new bank announced on December 5, 1835, 
that it would soon stand ready to serve the public 
under direction of John H. Kinzie (president), Gur- 
don S. Hubbard, Peter Pruyne, Elijah K. Hubbard, 
Richard J. Hamilton, Walter Kimball, Henry B. 
Clarke, George W. Dole, Edmund Dick Taylor, Wm. 
H. Brown (cashier). This bank began business about 
December 1 5, and with large deposits, at the corner 
of La Salle and South Water streets. 

The currency in circulation in Chicago was in part 
the bills of the Illinois State Bank, and in part the 
issues of remote banks which contributed to the peril- 
ous inflation which was to be punctured in the Amer- 
ican crash of 1837. Now the madness of inflationist, 
speculator and boomer took evil hold upon Illinois. 

The cry was for public internal improvements, and 
on February 27, 1837, the legislature actually inau- 
gurated an internal development system whereby 
$400,000 was to be spent upon waterways, $9,650,000 
upon railways, and $200,000 upon roads and bridges. 
And the sum, great in those days, of $10,250,000 was 
actually appropriated by the legislature to materialize 

[80] 



The Portland Block in 1881 
Southwest Corner Washington and Dearborn Streets 



the popular vision. But there must be money for 
these grand projects. 

In the legislative session of 1837, year of trouble, 
the State increased the capital stock of the Shawnee- 
town and state banks until it amounted to $4,800,000 
in case of the state bank, $2,100,000 being subscribed 
by the State, payment to be made in part from the 
State's dividends of the surplus revenues of the United 
States, and the remainder from sale of state bonds. 

In the case of the Shawneetown Bank, $1,500,000 
in capital stock was taken by the State. In each case 
the State was a majority stockholder, although private 
stockholders controlled a majority of the directors. 

The banks were fiscal agents of the authorized 
canal and railroad funds. When the state bonds were 
offered in open market they could not be sold at par, 
and it is said that the bonds taken by the state bank 
were never sold, although the bank went about extend- 
ing its business on such extraordinary security. 

Then there descended upon Illinois, with vast and 
improvident ventures thus financed, the panic of 1837, 
when, throughout the United States, suspension of 
specie payment was the rule. The state bank was 
indeed in trouble. Failures of speculative customers 
had weakened it, and, as the state financial agent, it 
owed the canal and railroad funds large amounts. In 
July of this calamitous year the legislature, in special 
session, legalized suspension of specie payment. 

Never after did the state bank redeem its obliga- 
tions in hard money, although under the act it con- 
tinued to be the State's financial agent. 

Illinois struggled on with its grievous system of 
public improvements a little longer, and then state 
bonds proving utterly unfruitful sources of revenue 

[Si] 



in 1839, in extra session of the legislature, the whole 
proud and foolish undertaking was formally abandoned, 
the outlay having been 16,014,749.53 and the visible 
investment a network of unfinished railroads. It was 
a sorry spectacle presented by Illinois when her bonds 
went begging about New York and London at fifty 
and seventy-five per cent, below par. 

In 1843 the State Bank retired from the banking 
business, arbitrarily forcing liquidation of the banks 
which it virtually owned. In this year the Chicago 
branch of the State Bank died, and for nine years after 
the banking of Illinois was done entirely by private 
bankers, the currency in vogue being issues of banks in 
other States, legal or illegalm Illinois as it might be. 

And still the "wild-cat" raged in American bank- 
ing something for nothing, nothing for something 
"heads, I win; tails, you lose." One class of the 
creators of "wild-cat" currency was insurance com- 
panies doing a banking business. But in those days 
of "wild-cat" banking there was at least one real bank, 
of parentage no more legitimate than branded the little 
institutions so freely issuing promises never to be made 
good. 

This bank was the creation of George Smith and 
Alexander Mitchell, Scotchmen of prowess and probity, 
men of later fame and wealth, and the bank was named 
the Wisconsin Marine and Fire Insurance Company. 
George Smith's bank succeeded on ability and honor, 
good assets always. Like other folks Smith issued his 
certificates, but, unlike many others, he redeemed 
them. If his business was illegal it was not dishonest, 
and, when in 1853, after years of unsuccessful assault 
upon its credit, his company was legalized under the 
banking law of Wisconsin, it passed into the second 

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chapter of honorable public service, and continual 
possessor of a good name on all continents. 

The era of the irredeemable continued. An infant 
city with an illimitable business future called for stable, 
honest money. On December 26, 1850, at a meeting 
of citizens at the Court House, the legislature was 
memoralized in part as follows: 

"Banks properly formed and conducted would be of 
immense benefit to all the interests of the State. 
Transactions have become larger, and, rapidly increas- 
ing, requiring a circulating medium, convenient and 
convertible at home into gold and silver at the option 
of the holder. By withholding bank charters the 
circulation of paper currency is not checked, but, on 
the contrary, we are flooded with paper from all parts 
of the Union and Canada, and, in many instances, 
defrauding our citizens by passing worthless paper 
upon them for their labor or their products. 

"We, therefore, would respectfully ask you, as the 
guardians of the growing interests of the State, to give 
us at the earliest moment such a general banking law 
as you in your wisdom may determine, placing such 
safeguards and restrictions in its provisions as will 
amply secure the bill-holder from loss, making it open 
for all to engage in who conform to its require- 
ments," etc. 

This petition brought forth the State general banking 
law of February 15, 1851, the latter essentially a copy 
of the New York law, and parent of sundry legal 
banks of issue. This act was amended February 10, 
1853. The banking act of 1851 was ratified by a 
popular vote, the vote standing 37,578 for and 31,321 
against the law. 

A condensed record of certain unsuccessful institu- 

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tions of the period would contain such significant 
entries as these: 

"Closed, but with all circulation redeemed." 

"Retired from business, but redeeming circulation 
at par." 

"Suspended, but redeeming circulation." 

"Retired from business." 

"Closed by protest, with circulation but partially 
redeemed." 

"Circulation retired and paid up in full." 

"Forced into liquidation, but circulation redeemed." 

"Involuntary liquidation, all procurable currency 
redeemed." 

In this category of fortunate and unfortunate, wise 
and foolish, must be chronicled a comically prepos- 
terous adventure in reputed banking. This institution, 
started in 1852, was named the Bank of Chicago, and 
was managed by Seth Paine and Company, the per- 
sonality of the latter being Ira B. Eddy. To pro- 
mote the Bank of Chicago, was issued eight numbers 
of a publication entitled the "Christian Banker" and 
for the reception of authoritative information on bank- 
ing, from the great departed, a trance medium was 
brought in to set up her psychic wire. Utterances of 
the "Christian Banker" and other literature were the 
following: 

"Christianity being the purest and scarcest metal, 
like gold among bankers, we take it for our standard; 
and everything and everybody which does not come 
up to that standard, we quote below par, until they 
reach the point where neither zero or Nero can 
measure them." 

"Bring on your bills for redemption, and when 
objection is made to the various trash paid out by 
Tucker, Burch, Smith, and other chaps here, we will 

[84] 



open our mouth, or the Lord will open the mouth of 
the Balaam's ass to keep you from being shaved 
twelve per cent by the Great Mogul and his under- 
strappers, who next to R. K., pursue the people 
with swiftest destruction, and keep you trotting over 
here with bills for redemption till you wear out more 
shoe leather than Jo. Kenyon's whole stock amounts 
to all because you don't know any better than to 
keep your accounts with men who throw us out 
because we reduce rates. 

"We loan to no one to pay debts. We loan to no 
one to aid in murder of anything which has life. We 
loan to no man to aid in speculating in that which is 
necessary to life. We loan nothing on real estate, 
believing that real estate cannot be bought and sold, 
and that possession with use is the only title. We 
loan nothing to aid in making or selling intoxicating 
liquors, or tobacco in any of its forms. We loan noth- 
ing to gamblers or usurers who borrow to loan again. 
We loan nothing except for aiding the natural exchange 
between the producer and consumer, whether of body, 
soul or spirit, and for the time necessary to produce 
the exchange. Our basis for making loans is estab- 
lished character of the borrower. He must be a 
temperate, honest and religious man or woman, with a 
mind sufficiently developed to understand his business. 
We are prepared to loan any amount needed for such 
business by such men." 

Well, the Chicago Bank did redeem its currency, 
but the bank ended in the courts: Ira B. Eddy was 
temporarily committed to an insane asylum, and Seth 
Paine, apparently larger of heart than wise of head, 
retired to the practice of socialistic theories which had 
early engaged his eccentric mind. 

[85] 



The rivalries and irregularities of Chicago banking 
precipitated in December of 1852 a so-called bank war, 
representatives of the legal banks securing the indict- 
ment of several representatives of illegal banking, 
among the latter George Smith, of the Wisconsin 
Marine and Fire Insurance Company. Of the com- 
plications of this campaign the Chicago "Democrat" 
remarks : 

"The regular banks have succeeded in getting about 
a dozen of the irregular banks indicted. The irregular 
ones are demanding specie as fast as they can get bills 
to demand it upon. But the joke is many of our reg- 
ular banks are irregular ones too; and keep some old 
corporation or some old name to get extra shinplasters 
under, or extra interest with. The wild-cats who have 
regular bankers for dormant partners were not indicted." 

But the inevitable litigation following indictment 
promised no speedy relief to the Chicago banking sit- 
uation, so that by the more direct route of legislation 
J. Young Scammon and other regulars secured from the 
legislature a prohibitory supplement to the banking 
law of 1851, whereby it became almost a felony to do 
a banking business in this state save under statutory 
regulation. 

This act, approved February 10, 1853, ended illegal 
banking in Illinois, although it did not check the flood 
of bills from other states, and particularly from Geor- 
gia, the bills, of whose banks were specifically named 
in a newspaper advertisement published December 27, 
1855, and signed by 120 business men and firms, 
urging Chicago banks to refuse to receive these bills on 
deposit. To which appeal an equal number of Chica- 
goans rejoined in the same way, calling the effort "to 
discredit any circulating medium that is redeemed 

[86] 



promptly where issued, as not only unwise but exceed- 
ingly mischievous," further declaring that the local 

o j * ^y 

interest rate proved a dearth rather than a sufficiency 
of money, and further adding: 

"The fact that two of the Georgia banks have stood 
a continuous run for four months or more, and have 
redeemed a half million per month of their issue in gold 
and silver, has increased our confidence in these banks, 
and the ability and disposition of the stockholders to 
promptly redeem all their issues. We shall therefore 
continue to receive and pay out, use and give credit to 
Georgia money, the same as the bills of other states so 
long as they are redeemed in specie at the banks where 
issued, and we advise others who are engaged in busi- 
ness to do the same until a full remedy can be had by 
amending our own banking law." To which may be 
added as an historical fact the statement that many 
Georgia banks were owned or controlled in Chicago 
where also their bills were redeemable. 

Verily, it was a day of motley money. In 1855 a 
railway conductor, collecting a total $203, had in his 
pocket bank bills from twelve states, Georgia banks 
being responsible for $115 of the total; Illinois state 
bank twenty dollars; and Chicago banks one dollar. 
Legitimized banking was conducted in Chicago between 
1851 and 1857, by the following institutions: 

Marine Bank of Chicago (J. Young Scammon); 
Bank of America (George Smith & Co.) ; Bank of 
Commerce (Davisson, McCalla & Co.); City Bank 
(Bradley & Curtis); Chicago Bank (I. H. Burch & 
Co.); Exchange Bank (H. A. Tucker & Co.); Union 
Bank (Forrest Bros. & Co.); Farmers Bank (Chase 
Bros. & Co.) ; Phoenix Bank (N. C. Roe & Co.); 
Merchants' and Mechanics' Bank (Levis Boone). 

[87] 



All of these were banks of issue, a noticeable 
security for their circulation being Virginia and Missouri 
state bonds. It is recorded that whatever disasters 
these banks encountered, the holders of these bills did 
not suffer. But there were other banks than the above 
banks of issue doing business in Chicago after the state 
law of 1851 began to give form and rule to Illinois 
banking, namely: the Butchers' and Drovers Bank, 
Metropolitan Bank, Swift's Bank, Chicago Savings 
Bank, Dollar Savings Bank, Marine Savings Bank, 
Dime Savings Bank, Illinois Savings Institution, John 
H. Kinzie, first president; Chicago Marine and Fire 
Insurance Co., chartered in 1836, after decease revived 
in 1848 and existing to the panic of 1856 and 1857, 
J. Young Scammon, president, as the largest moneyed 
institution in Illinois,with actual cash capital of $500,000. 
There was one other bank, which took more than 
ordinarily deep root at this period The Merchants' 
Savings, Loan and Trust Company, which, being 
founded in 1857, had for companions after subsidence 
of the financial earthquake twenty-seven banking insti- 
tutions. Today, as it happens, not one of the twenty- 
seven is in existence. 

Illinois banking between the panic 1856 and 1857 
and the outbreak of the civil war continued to show 
the results of defective legislation in the guile of the 
pirate and the embarrassment of the public. A bank 
with little or no true capital would be organized at a 
remote and inaccessible interior point, its circulation 
based upon bonds beyond which the state auditor 
declined to look for actual banking capital. Then from 
the obscure cross roads the convenient promises to pay 
fluttered forth, and divers and sundry honest people 
began to be the victims of that system of banking 

[88] 



known as the "wild-cat" and "stump-tail." Of course 
it does not follow that "wild-cat" banking could not 
have made good, but it is a fact that the peculiar rela- 
tion between their solvency and their guarantors, the 
several states of the Southern Confederacy, forbade a 
final demonstration. But the insufficiency of security 
of "wild-cat" circulation became painfully evident 
when, in the storm and stress period of 1857, a west- 
ern debtor sought the equivalent of this vagabond 
paper in eastern or foreign exchange or in specie. 

It is written that, with barely two exceptions, not a 
bank in Illinois in this strenuous time could keep its 
circulation at par with gold. But this sort of money 
was the best there was and so its circulation went on. 
On the eve of Lincoln's election in 1860, capitalists 
were in two classes in their attitude toward the prevail- 
ing system, one upholding the existing banking law, 
another contending that the whole thing was a miscon- 
ception of sound finance. Chicago's interest in the 
controversy was not acutely personal, for there were 
but few banks of issue here, yet none the less she 
needed sound money. 

But a crisis of unconceivable magnitude approached. 
Secession showed its purpose and its immediate finan- 
cial consequences. The banks of Illinois had been 
maintaining more than two-thirds of their aggregate 
circulation of $12,320,694 on the bonds of southern 
states. Expansion had prevailed, and Illinois currency 
had no uniform value. 

The winter and spring of 1861, dawn of civil strife, 
found Chicago in a demoralizing state of anxiety and 
uncertainty. Trade seemed about to suffer almost 
complete paralysis. Exchange rose and incessantly 
fluctuated in response to the crazy money seeking to 

[89] 



buy it, while from the banks came daily bulletins 
giving ratings of the varieties of discredited and 
accepted circulations. Bills actually had a current 
valuation between twenty per cent, and par. No man 
knew his wealth. 

The business interests in union with the Chicago 
Board of Trade sought to increase popular knowledge 
about currency values, but the people were unsteady 
as well they might be. Editorial utterances such as 
these from the Chicago Democrat, serve best to show 
the unsettled business conditions and the anxiety of the 
public mind. 

" No man is safe sleeping over night with one dol- 
lar of Illinois currency in his pockets. * * * On 
Saturday night next the laborers must have their 
wages. Will the 'wild-cat' give them gold or silver 
or the Dunham currency, or will they avail themselves 
of that opportunity to pay out their miserable c wild- 
cat?' Laborers of Chicago, arouse! * * * It is 
your sweat, it is your toil, that aggrandizes the Wild- 
cat' aristocracy of Chicago. They are fattening upon 
your blood. * * * Wild-cat bankers are worse than 
secessionists." 

The Board of Trade formally entered protest, and 
the Democrat promptly replied that more similar talk 
would be forthcoming. 

In the first part of the summer the bank situation 
was in such a bad way that the Marine Bank asked 
the Board of Education as a municipal depositor to 
accept sixty-five cents on the dollar, to which propo- 
sition John Wentworth and others made resistance. 
About this time there ceased to be an Illinois banking 
system which the State's commercial and industrial 
capital found of any use. 



[90] 



In 1860, before the crash of secession came, there 
were no solvent state banks, with an aggregate circu- 
lation, as above said, of $12,320,694 founded upon 
$9,527,500 worth of securities issued by Missouri, 
Tennessee, Virginia, Louisiana, North Carolina, South 
Carolina, Georgia and Kentucky. Two years after, in 
November 1862, ninety-three banks were in process 
of suspension or had closed. The liquidating banks 
paid about sixty per cent, on their currency. Of 
twenty-two solvent banks the circulation had been 
reduced from $12,320,694 to $566,163 in two years. 

So died the "wild-cat" in Illinois. True, in legis- 
lative session of 1861, the general banking law was 
amended so as to wind up the feeble, invigorate the 
promising, provide more efficiently for redemption, 
and place greater foundations under circulation; but 
neither such beneficent provisions nor an act passed 
and rejected by the people at the polls, designed to 
"establish a general system of banking upon a specie 
basis," could create for Illinois a circulating medium, 
and none of her own henceforth had she until national 
banks came. But currency from everywhere else, 
state notes and government greenbacks, flooded this 
commercial center, the worthless paper driving the 
better from Washington out of circulation both in 
Chicago and in its vast tributary territory. 

Then, striving towards uniformity and security in 
the creation of a circulating medium, the people of the 
United States passed the national banking act in 
March, 1863, an( ^ tne people of Chicago, represented 
in meetings at the Board of Trade, the banks con- 
curring, ordained that on and after May i6th, all 
transactions, whether of buying or selling, should be 
based on legal tender treasury notes. Further order 



and security came to Chicago banking when, on April 
6, 1865, was organized the Chicago Clearing House, 
with officers as follows : William F. Coolbaugh, 
President; Josiah Lombard, Vice-President; E. E. 
Braisted, E. I. Tinkham, Ira Holmes, A. C. Badger, 
Lyman J. Gage, Clearing House Committee; George 
A. Ives, Manager. Thenceforth, until the momen- 
tary paralysis caused by the great fire of 1871, the 
story of Chicago banking became one of expansion, 
elimination and progress. 

Thus became inaugurated in the central market of 
the continent a system of sounder banking. At the 
close of 1864 eight national banks were in operation. 
To a market ever demanding larger banking facilities, 
The Merchants' Loan and Trust Company continued 
to discharge a role commensurate with the necessities 
of this community and with the purposes of the 
founders of this institution. The situation at this 
time, which this bank aided to create and develop, was 
thus epitomized by the Chicago Tribune: 

"The banking transactions of Chicago are full of 
cash. It stands as the paymaster of the great north- 
west, and disburses the millions in currency that is 
required to move its great food staples. Each year by 
the opening of new channels and development of new 
currents of trade has evidenced our legitimate and 
inevitable field. The banking capital of Chicago at 
the close of this year (1864) has more than doubled in 
the past twelve months, and three times as large as 
that of 1862. Within the past fortnight one of our 
leading banking houses in a single day shows trans- 
actions reaching two million and a half dollars, and 
there are other instances almost equally striking. It 
must be remembered that this is currency actually 

[92] 



handled, counted, piled, and carried away. One 
million dollars a day goes into the country to the 
producer. Well may the bankers rejoice that days of 
'rag money* are over." 

From the close of 1864 to 1871, year of the great 
fire, the history of Chicago banking is serene and 
uneventful. Together grew trade and banking facil- 
ities, the demands of the former justifying at the time 
of the fire nineteen national banks and nine state or 
private institutions, savings banks not included. The 
total bank capital of the city was then $13,500,000. 

When the conflagration of 1871 had done its work, 
the building of every national bank but one was found 
to have succumbed. The vaults of the private banks 
also were, as a rule, in ruins. The fire broke out on 
the evening of Sunday, October 8. As early as the 
Wednesday following, at least twelve banks had tem- 
porary quarters. On Thursday the banks resolved to 
repay depositors fifteen per cent. The accommoda- 
tion was not munificent, but on the other hand, for the 
good of the distracted city, a run upon the banks was 
to be avoided. Much of the assets of the banks was 
commercial paper, which, for the maintenance of the 
stability of the great but stricken market, the banks 
treated with leniency. On October 17, most of the 
banks resumed payment. For several months there- 
after, through the combination of circumstances created 

y O 

by the disaster, Chicago's banks had more money than 
before the fire, and this in spite of the payment of 
Chicago's business indebtedness to the East. On 
October 19, the savings banks resumed. While they 
had previously resolved to pay in full all depositors 
whose claims did not exceed twenty dollars, they now 
resolved to pay to small depositors in need of money 
a larger amount. In all this period of deadly prostra- 

[93] 



tion and instant and courageous revival, it was the 
opinion of the wise and just that the banks of the city 
were among its truest and best conservators. A year 
after the fire business had been generally resumed, the 
banks in operation being twenty national, eight state, 
and eighteen savings. Their combined capital and 
surplus was $14,570,885, and their combined deposits 
were $38,129,134. To these banking facilities should 
be added those of several private institutions, and of 
an agency of the Bank of Montreal, opportunely 
established here a few weeks after the fire. 

When the panic of 1873 temporarily paralyzed the 
coujitry, the bankers of Chicago were no exception, at 
least in the consideration of the policy of the suspen- 
sion of currency payments. It was a grave hour, and 
there was fear, but there was courage, too, and the 
banks of Chicago continued to do business without 
demoralizing recourse to the expedients of peril. This 
was the comment of a local journal on the attitude of 
Chicago's banks during this crisis: "Had there been 
any sham about Chicago, the late panic, coming when 
it did and how it did, would have ground us to powder. 
That it did not, that it has passed, without leaving a 
mark of its passage, is a fact which we commend to our 
own citizens and those of other cities who need to be 
reminded of it." 

Apropos to the way in which Chicago banks bore 
the test of panic, there is offered in instance the follow- 
ing testimony from Andreas' "History of Chicago:" 
"The attention of the reader should be directed to the 
general solvency of the state banks as evidenced by 
the manner in which, as a rule, these weathered the 
storm. Among notable illustrations were The Mer- 
chants' Loan and Trust Company, which has never 
known one hour of financial embarrassment." 

[94] 



UNIVERSITY OF ILLINOIS- URBANA 

332.1H234F CODS 

FIFTY YEARS OF BANKING IN CHICAGO CHGO 



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